As the world’s most powerful collection agency, the IRS has several methods and resources to collect money from delinquent taxpayers. Some enforced collection actions include summons for information or evidence of an individual’s financial situation, property seizures, liens, levies, and garnishments. Additionally, penalties and interest continue to accrue on all debts owed. For most people, a substantial and outstanding tax liability can quickly increase to an unmanageable amount that may be difficult to resolve.
Offer in Compromise (OIC) is an IRS program that allows a taxpayer to settle his/her delinquent taxes for less than the total amount the IRS claims is owed. If the IRS determines that a taxpayer cannot “full pay” his/her tax debt, the IRS may be willing to settle that tax debt for less than what is allegedly owed. Conversely, if the IRS determines that a taxpayer has the ability to pay all of the tax debt, the IRS will not be interested in settling that tax debt on the basis of what they call “Doubt as to Collectibility.”
Although this program may sound too good to be true, it’s legitimate. However, not all people will qualify for an Offer in Compromise, and all offers made must be reasonable and reflect an accurate assessment of what the IRS can expect to collect within 24 months.
In order to qualify to submit an offer, you must first be in “Current Compliance” with IRS’ requirements, including:
If you meet the conditions listed above and submit the necessary paperwork for an Offer in Compromise, the IRS will evaluate your financial circumstances and ability to pay based on their assessment of your household’s income and expenses and the total equity of your assets. For this, you must submit the following:
* Your initial payment will vary based on the amount of your offer and the payment option you choose. The IRS offers the following payment options for an Offer in Compromise:
Submitting an offer application does not guarantee that the IRS will accept your offer. If your offer is returned or not accepted, your payment(s) will be applied to your tax debt. The $150 application fee is not applied to your outstanding tax debt.
You must maintain compliance with all tax laws even after your OIC is accepted. If you fail to remain in “Current Compliance” with the IRS within five years after your offer is accepted, your offer may be returned or rejected and you may acquire additional interest and penalties. In other words, if you don’t file or pay your taxes on time, the IRS may revoke your OIC agreement.
Before submitting an Offer in Compromise, it is important that you explore and fully understand all of the payment options available for resolving your tax debt. Just as importantly, it is crucial that you speak with an experienced tax attorney who can assist you in determining your best option, answer all of your questions, clarify any doubts, and uncomplicated intricate tax laws. Prolonging settling your tax will only result in added interest and penalties, thereby increasing your debt. Call me today at 865-566-0125 for a FREE CONSULTATION to see if the Offer in Compromise Program is right for you.