OFFER IN COMPROMISE
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Do you owe back taxes to the IRS? Did you know that you are able to settle the tax debt for less money with an Offer in Compromise? It’s true! For example, you can turn a $150,000 tax debt into a $150 tax debt. If you can relate to this scenario, Offer in Compromise is certainly the right IRS tax resolution for your needs. At Tax Defense & Relief Group, we specialize in OIC. You can count on us to produce a favorable outcome for you.
UNDERSTANDING OFFER IN COMPROMISE
An OIC is a type of out of court agreement between a taxpayer and the IRS. OICs are designed to negotiate a resolution to the taxpayer’s liability and place collection efforts, including tax liens, on hold. Do keep in mind that the IRS has the power to compromise or settle federal tax liabilities by accepting less than full payment, provided the taxpayer can provide valid reasons.
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DO I QUALIFY FOR AN OFFER IN COMPROMISE?
An Offer in Compromise agreement is an excellent option for those who qualify. It allows you to pay less than the full amount you owe to the IRS, which can be an enormous relief for those struggling to pay overdue individual or business taxes. But do you qualify for an Offer in Compromise? How does someone qualify for the Offer in Compromise program? The IRS recently expanded how taxpayer’s can qualify for an OIC with the Fresh Start Program. Today, there are three qualifications the IRS will examine.
- Doubt as to Collectability
When the IRS looks at doubt as to collectability, they’re looking for whether there is doubt that they would be able to collect the full amount they’re owed through normal collection measures. The IRS will examine your financial information to determine reasonable collection potential, including your projected disposable monthly income, your assets, and whether or not your financial situation seems likely to improve. Then, they will make a determination about whether they would be able to collect more from normal collection means or whether an Offer in Compromise would give them a higher amount. - Doubt as to Liability
Doubt as to liability applies if the Internal Revenue Service determines that your assessed liability is incorrect. If your assessed liability was too high based on an error, the IRS may grant you an Offer in Compromise (Doubt as to Liability). To qualify for doubt as to liability, you’ll need to provide proof that there is a genuine dispute about the amount of your tax liability. Then, the IRS will assess whether or not they agree. - Effective Tax Administration
The IRS will consider granting an OIC for effective tax administration if they determine that collecting your full tax liability would cause financial hardship. To assess economic hardship, the IRS will take a close look at your financial records.To prove qualification under one of these three factors, the IRS will closely examine your financial situation. And in addition to looking at these three qualifiers, the IRS will also check to see if a taxpayer is up to date with filing all their tax returns, which is required, and to see if a taxpayer is currently involved in any open bankruptcy proceedings, which is disqualifying.
It can be challenging to tell whether or not you qualify for an Offer in Compromise. If you’re unsure whether or not you qualify for an IRS OIC, contact Tax Defense & Relief Group. Our team of tax professionals will learn more about your unique financial situation to determine if you may qualify and can help you begin the OIC application process if you do.
OFFER IN COMPROMISE EXPERTS
At Tax Defense & Relief Group, we employ an array of strategies to structure IRS payment plans. Our team evaluates the transcripts of your tax account to understand what the IRS sees. Next, we develop a tax resolution strategy designed to resolve the totality of your tax problem.
Our experts will proceed to evaluate your personal economic circumstances. We will find out what you can afford to pay, as well as when and how you can facilitate the payments. With this information and our expertise in tax law and regulations, our company negotiates a settlement that satisfies IRS guidelines and legal requirements.
Once both parties can live with the proposed solution, your tax problem will no longer exist. You can then pay the lowest amount allowed by law.
WHAT HAPPENS IF YOU OPT FOR OFFER IN COMPROMISE?
If you qualify for an OIC and meet the IRS criteria, our veteran tax specialists, enrolled agents, and tax attorneys will contact the IRS on your behalf to negotiate the best OIC settlement. As the negotiations usually center on your living expenses, monthly income, valuation of your assets, and potential future income, be prepared to disclose your full financial information to the IRS. You may be required to provide supporting documents to verify expenses and income claimed.
For most individuals, there is an application fee for requesting an IRS Offer in Compromise, which is not refundable and is not to be confused with a down payment. However, there are exceptions. There are no application fees for those requesting an OIC based on doubt as to liability and there is a fee exception for individuals who quality for a low-income exception. Our tax professionals will advise you on the exact application fee you may need to pay based on your unique situation.
Do note that the process can take anywhere from three to six months from the time of submission. In some cases, an OIC settlement may take up to a year to conclude. Once your proposal is accepted by the IRS, you have approximately five to 12 months to pay the settlement amount.
If your proposal is accepted by the IRS, there are two payment options: in a lump sum cash offer or in a periodic payment offer. Despite its name, a lump sum offer doesn’t mean you must only pay your full amount at once, though you could do so. Instead, a lump sum offer can allow you to pay in up to 5 or fewer installments within 5 or fewer months of your offer’s acceptance. A periodic payment offer is when you set up an agreement to pay your offer amount in regular monthly payments, similar to how you might with an installment agreement, that take place over the period of six to 12 months. As with many other types of IRS payment agreements, there are multiple ways to pay your offer amount, such as through credit card or through direct debit from your bank account.
CAN I APPLY FOR AN OFFER IN COMPROMISE ON MY OWN?
Anyone can apply for an Offer in Compromise on their own but we generally do not recommend doing so. Getting approved for an OIC is challenging. The IRS wants to collect a taxpayer’s full tax bill whenever possible, so all OIC applications are looked at under a microscope. The IRS looks at every aspect of a taxpayer’s financial situation in great detail, including a taxpayer’s assets, income, income tax owed, past income tax payments, past tax records, business tax deposits, and potential future income.
Getting approved for an OIC can be quite challenging for any taxpayer but can be particularly challenging for those who have more complicated records, such as self-employed individuals and business owners. There are a myriad of forms to complete when applying for an OIC (including the additional Form 433-b for business owners) and extensive documentation of financial records must be submitted.
Receiving an Offer in Compromise isn’t easy. Because being approved for an OIC is challenging, complex, and requires that extraordinarily extensive records, we generally recommend seeking the help of a tax professional if you are considering applying for an OIC. A tax professional can help you decide the best strategy to take to get approved for an OIC, ensure you provide the IRS with proper documentation, and take the stress away from applying for this complex tax relief strategy.
CHOOSE TAX DEFENSE & RELIEF GROUP FOR OFFER IN COMPROMISE SERVICES
At Tax Defense & Relief Group, all our professionals are certified tax resolution specialists. While we are based in California, our team has the advantage of a national perspective pertaining to OIC processes. We have years of experience in handling active cases throughout the United States. We are meticulous in our work and can prevent unnecessary errors and any misapplication of tax law while negotiating your OIC settlement. We also aim to reduce our clients’ worries, thus provide regular updates as their case progresses.
Start checking whether you qualify for an OIC settlement today!
Call Tax Defense & Relief Group now to schedule an initial consultation with us.
