IRS OFFER IN COMPROMISE
An Offer in Compromise allows taxpayers to negotiate and settle their tax debt with the IRS for less than they owe for a welcome fresh start. For qualifying taxpayers, an Offer in Compromise allows a unique opportunity for taxpayers to compromise their tax debt and may significantly reduce the amount of tax that the taxpayer ends up paying the IRS.
Although many people are skeptical that the IRS will actually reduce their tax debt, in many situations, it is more economical for the IRS to settle out a tax debt with someone who cannot full pay than to keep spending time, money, and resources attempting to collect the debt.
If you owe taxes that you are not able to pay the IRS, you absolutely need to speak with Austin & Larson Tax Resolution, an experienced Michigan team of tax debt relief professionals, to determine if you would qualify for this settlement program. Although not all taxpayers will qualify, for those that do, this tax debt relief program could significantly reduce your taxes owed. To find out if you qualify, we provide valuable Offer in Compromise help that Michigan taxpayers can trust. Call us now at 1-866-668-2953 for immediate tax debt help.
EXPANSION OF OFFER IN COMPROMISE UNDER IRS FRESH START PROGRAM
In 2012, the IRS announced the Fresh Start Program. One of the major changes under the Fresh Start Program was to expand the Offer in Compromise program, making it easier to taxpayers to qualify for an Offer in Compromise.
The Fresh Start Program revised the calculation for taxpayer’s future income. It allows taxpayers to include student loan payments and payments on delinquent state and local tax debt as necessary expenses. It also increased the allowable living expenses that a taxpayer could claim.
Because of these IRS changes, many taxpayers that previously did not qualify for an Offer now do. However, just because the Offer program was expanded to allow more taxpayers to qualify, it does not mean it will remain that way. It also does not mean that successfully negotiating an Offer in Compromise is simple. It is important to have a qualified representative to represent you through the Offer process. If you owe back taxes, it is important to find out if you qualify for an Offer in Compromise under the current program. If you do, you need to act quickly to make sure that your Offer is accepted under the current rules.
FORMS AND IRS OFFER IN COMPROMISE CALCULATOR
There are numerous Offer In Compromise forms that need to be completed and submitted for an Offer in Compromise offer that will be considered to be valid by the IRS. For an individual filing an Offer in Compromise, there are two main forms that need to be completed. The first form that needs to be filed is the form 656. This is the form that requests the Offer in Compromise. It identifies the taxpayer requesting the Offer and the tax periods to be included in the Offer. It also states the proposed Offer amount and the payment terms that the taxpayer is requesting. This form is then signed by the taxpayer.
The second form that must be attached to form 656 for an individual offer is form 433-A. This form lists out all of the asset information of the taxpayer and their monthly income and expenses. The IRS uses this form and the supporting documentation to analyze the taxpayer’s financial situation. This analysis, along with a review of the taxpayer’s total facts and circumstances, is then used to determine whether the taxpayer qualifies for an Offer in Compromise.
The IRS has an Offer in Compromise calculator on their website to assist taxpayers in determining if they qualify for an Offer in Compromise. Although this is a helpful tool, it does not replace the advice and expertise of a qualified tax debt expert. There are many factors that this calculator does not address. Its approval does not mean that your Offer will be accepted. In the same regard, just because the calculator states you will not qualify does not mean that you do not. It is best to speak with a representative that has experience successfully filing and negotiating Offers in Compromises with the IRS.
Form 656, offer in Compromise Resources
Austin & Larson Tax Resolution can assist you in all aspects of these forms.
Use this form when applying for an Offer in Compromise (or OIC), Which is an agreement between you and the IRS thet settles your tax liabilities for less than the full amount that you owe.
For an OIC based on doubt as to collectibility or based on effective tax administration Download Form 656-B, a booklet which includes instructions and the following forms:
- Form 656, Offer in Compromise
- Form 433-A (OIC), Collection Information Statement for Wage Eamers and Self-Employed Individuals.
- Form 433-B (OIC), Collection Information Statement for Businesses.
for an OIC based on doubt as to liability, download the following forms:
OFFER IN COMPROMISE FOR BUSINESS TAXES
Through the IRS Offer in Compromise, businesses can also compromise their tax debt. IRS Form 656 Section 2 has a section to list business tax periods. This section is for taxes owed by a corporation, partnership, or an LLC classified as a corporation. A sole proprietor would include any business taxes under Section 1. A separate Offer is required for a business and cannot be included on an Offer for an individual. The business must also pay its own filing fee and 20% down. The business then needs to complete form 433-B (OIC). Much like the 433-A (OIC) for individuals, form 433-B (OIC) requires information on the business’ income, expenses, and assets. This information will be used by the IRS to determine whether the business qualifies for an Offer in Compromise.
OFFER IN COMPROMISE LOW INCOME CERTIFICATION GUIDELINES
Taxpayers filing an Offer in Compromise need to send checks with their Offer for the $186.00 filing fee and 20% of their Offer amount. However, low-income taxpayers may qualify for a waiver of the filing fee. They will also not be required to send in the initial payment of 20% down with their Offer. The low-income certification is based on the gross monthly household income of the taxpayer and their family size. Businesses do not qualify for the low-income certification and must send in the required checks with their Offer in Compromise.
From our tax debt compromise experience with the IRS and the State of Michigan, these eight tips can be invaluable in how to get an Offer in Compromise approved.
- Make sure that all required returns have been filed and processed by the IRS
- Make sure that you are compliant in paying your current year taxes
- Fill out the IRS forms clearly and accurately.
- Do not fail to disclose assets or income. This can ruin your credibility with the IRS and is also a federal offense.
- Sign all forms and mail them to the correct address along with the required filing fees and 20% down.
- Include all requested supporting documentation. Make sure that you send copies, not your original documentation, as you will not get them back.
- Timely respond to IRS requests for information. Offer in Compromises are very time specific. Failing to meet a deadline can result in the IRS returning your Offer.
- Hire an experience representative, like Austin & Larson Tax Resolution, to prepare, file, and negotiate your Offer in Compromise. This is a lengthy and time consuming process. The IRS also has many collection rules and procedures that are complex. If you are not aware of them, you may not correctly calculate your eligibility and you will not know your rights in negotiating your Offer. The best thing you can do to ensure that your Offer is successful is to have an experienced representative on your side.
AFTER YOUR OFFER IS ACCEPTED
After your Offer in Compromise is accepted, there are still steps that need to be taken to ensure that your Offer in Compromise stays in effect. First, you must meet the payment conditions of your Offer. If you do not pay the full amount of your Offer within the time allowed, your Offer will be revoked. Second, for a period of five years, you must timely file all required returns. You also cannot accrue any new tax debt during this same period. Again, failure to meet these conditions will result in the IRS revoking your Offer in Compromise. If this happens, they will put all of your original tax debt back in place, along with additional interest and penalties. Once you have met the payment conditions, the IRS will release any previously issued tax liens.
MICHIGAN OFFER IN COMPROMISE
The Michigan Offer in Compromise Program is modeled after the IRS Offer in Compromise Program.
An Offer in Compromise is a request by a taxpayer for the Michigan Department of Treasury to compromise an assessed tax liability for less than the full amount. An assessed tax liability includes tax and any related interest and penalty.
Austin & Larson are well versed in Offer In Compromise guidelines that make up the State of Michigan’s Offer in Compromise program. For example, when a Michigan taxpayer may be eligible to participate in the program, the process by which Treasury will evaluate a taxpayer’s offer, and what a taxpayer may expect with respect to any acceptance or rejection by Treasury of the taxpayer’s offer.
Michigan Offer in Compromise Resources
PROFESSIONAL OFFER IN COMPROMISE HELP IS NEAR IN MICHIGAN
Contact Austin & Larson Tax Resolution to help streamline the Offer in Compromise process for tax debt for both the IRS and the State of Michigan. We pledge to represent you in tax debt communications with both the IRS and State of Michigan with the highest professionalism, integrity, and competency that you will find among all tax debt relief companies. True Fresh Start Tax Settlement is within your reach.