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Tag Archive for Offer In Compromise

Offer In Compromise FAQs

Chuck Woodson, Offer In Compromise

We’re all responsible for paying our fair share of taxes each year. But what happens when the amount that you owe is simply out of reach? What happens if you failed to make payments in a timely manner and your financial circumstances have shifted to the point where your cumulative debt is beyond your ability to pay? In the face of this untenable position, your best option for paying the IRS may be what is known as an Offer in Compromise.

The Goal of the Offer in Compromise

The Offer in Compromise, or OIC, was created to accomplish two goals: it allows American taxpayers who are unable to pay the full amount of their tax debt a way to negotiate a payment that is in keeping with their ability to pay, while at the same time providing the IRS with the ability to collect at least a portion of the amount that is owed to them. The process is neither simple nor fast: it generally takes at least one to two years for both sides to come to an agreement on an amount to be paid.

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File Back Tax Returns Before Submitting An Offer In Compromise

Venar Ayar, Tax Attorney, Offer In Compromise
Pre-Offer In Compromise Requirements

Before you submit an Offer in Compromise (OIC) to the IRS, you must file all delinquent tax returns. If you send in an OIC and still have unfiled returns, the IRS will return your offer without even considering it.

Even worse, the IRS will keep an initial payment sent with the offer and apply it to your tax debt. Unlike a typical OIC rejection, you don’t have the right to appeal this decision.

Other Important OIC Requirements

The IRS has a good reason for implementing this policy. The OIC program allows some taxpayers to settle their tax debt for pennies on the dollar. Why should the IRS agree to settle your tax debt when they don’t know how much you really owe?

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What Is An Offer In Compromise?

An Offer In Compromise (OIC) is essentially an agreement you come to with the Internal Revenue Service (IRS) in order to settle your tax debts. Not everyone who owes a tax debt is eligible for an OIC; it’s specifically made for those who are not going to be able to pay during the time that the IRS has to collect from them. If the OIC amount you’re offering to pay back is less than the reasonable collection potential (RCP), the IRS won’t usually accept it.

The RCP is a measure of one’s ability to pay back their tax debts. It includes the value that can be realized from the taxpayer’s assets, such as real property, automobiles, bank accounts, and other property. An RCP also accounts for potential future income.

Qualifying For An Offer In Compromise

There are three main situations where the IRS considers an OIC.  These are the basic qualifications.

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IRS Debt Settlement- Scams Vs. The Real Deal

All over the television, and in your spam email box, there are advertisements for IRS settlements.  These companies can help you lower your IRS debt for a fee, customers say they paid a minimal amount, blah blah.  Is this a scam? Well, most likely.  There is a possibility of a settlement for your IRS debt, but you definitely do not need to pay horrendous fees to a company to do it for you.

 Here are some tips:

1.An IRS settlement is called an Offer in Compromise.

2.  The IRS cannot accept a settlement if you can actually afford to pay your bill.  If you know this is you, check out the payment plan options on the IRS website.

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You Owe The IRS And May Qualify For An Offer-In-Compromise

Barry Fowler, offer-in-compromise, late tax filing

If you’re squeamish about filing your taxes because you owe back taxes and aren’t in a position to pay in full, you might be able to qualify for an Offer-in-Compromise (OIC). Depending on how much you owe, you could potentially save thousands of dollars in taxes, penalties, and interest by qualifying for an IRS offer-in-compromise settlement.

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If The IRS Sends You A Bill That You Can’t Pay… Please Don’t Have A Heart Attack!

A few years ago, a client came to me almost at the point of a nervous breakdown. He had been recently audited by the IRS and subsequently received a tax bill in the mail for over $180,000! After briefly perusing the documents he brought in, I quickly realized that something was significantly amiss with this tax bill. So I advised him not to panic, but to leave his documents with me. After comparing the audit adjustments with his documents, I decided that we had to go and pay the IRS a visit.

A couple weeks later, we were sitting down with the officer who had conducted the audit and his manager, and after reviewing the audit adjustments together, the amount originally assessed was eventually cut in half. The audit officer, who appeared to be a rookie, had apparently done a very poor job. Read more

Are You Eligible For An Offer In Compromise?

You just heard or saw a commercial that promises, “If you owe the IRS $10,000 or more we can settle your tax debt!” Don’t fall for it. Even when you hear the announcer say “Yes, no problem! We can settle your tax debt no questions asked.” If you called and you’re on the phone with a sales person, listen to your instincts and hang up right away!

An Offer In Compromise (OIC) is what is being hinted at in these commercials. An Offer In Compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability, or when doing so creates financial hardship. However, there are many things that must be considered and questions that any respectable professional will ask prior to saying they can settle your IRS Tax debt for less than the full amount of the debt. Read more

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