Offer in Compromise Help
Offer in Compromise (also called an OIC) is the most preferred IRS program by taxpayers in tax trouble. It offers qualified individuals to settle their back tax debt for potentially much less than they currently owe to the IRS. There have been cases where the IRS has accepted as little as one percent of the amount owed to settle the debt.
You might wonder if this is legal or still being offered. The answer is: Yes. However in the recent years only a small amount of claims (about 26%) have been accepted by the IRS. An Offer in Compromise can be difficult to obtain, but it is still worth the effort to see if you qualify.
The first step to settling your tax debt with an Offer in Compromise is having a tax professional submit the proper form to the IRS on your behalf. When this form is submitted, your offer will at the very least have to be reviewed and considered by the Internal Revenue Service.
What You Need To Qualify
Of course most of people who owe taxes to the IRS would love to settle their debt for less, but the process to qualify for an Offer in Compromise can be overwhelming.
To be accepted into the OIC program you must:
1. Prove that the IRS will not be able to collect the full amount in the future. This is called “doubt to collectability”.
2. Prove that the demand by the IRS for payment in full will cause “financial hardship” or will be “inequitable”.
If you think you meet one of these conditions you should call our tax professionals to find out if you should file for an OIC.
The Process of Filling an OIC
As much as it might be tempting to personally call the IRS, this is not the best way to get the Offer in Compromise process started. For your best chance at success, have a tax professional file and submit Form 656 on your behalf. An experienced tax professional will know how to properly fill out the paperwork, what to disclose, any more importantly what not to disclose, and how to submit it.
After you have been accepted into the OIC program, a tax professional can then set up affordable installment payments for you to make on a monthly basis directly to the IRS.
Pros & Cons of Offer in Compromise
Pro: You get your tax debt reduced.
Con: Applying for an OIC initially might seem easy but in reality qualifying for it demands additional financial documentation to be submitted to the IRS beyond the initial form. The IRS will ask you for your pay stubs, bank statements and more. Many taxpayers look at the overwhelming amount of documentation and details mandatory to just attempt to qualify and end up making mistakes or giving up. That is why you need an experienced tax professional on your side.
In addition once you have submitted all this information you might still be rejected. Now the IRS will have all the information they needs about your finances to start the collection process. So if you are not likely to qualify we would suggest not initiating the OIC process at all.
To find out if you are likely to qualify for an Offer in Compromise or one of the other programs, talk to one of our tax professionals today. We are offering a free 15-miute consultation to taxpayers who call right now.