If you owe more than $10,000 in IRS tax debt, you may qualify for an IRS tax debt relief program. One tax relief program you may qualify for is an Offer in Compromise OIC. Qualifying taxpayers may be able to settle their tax debt for a fraction of what they owe. If you owe back taxes, contact Austin & Larson Tax Resolution to speak with a tax relief specialist to see if you qualify for an IRS Offer in Compromise.
The Offer in Compromise OIC program was established by the IRS to help taxpayers who are experiencing financial hardship due to the tax burdens they have accrued over time. Taxpayers that owe more than $10,000 to the IRS may qualify for a tax debt relief program. The Offer in Compromise OIC program takes into account the equity of all of your financial assets and performs a calculation of your future earning potential. Based on the combination of these two elements, the IRS determines whether you qualify for the Offer program and at what amount they should accept an Offer. There are three main elements to an Offer in Compromise: 1) Compliance, 2) Filing the forms and supporting documentation, and 3) negotiating the Offer. The Offer in Compromise is not a simple process. The best chance for having your OIC approved is to have a qualified tax relief specialist represent you through the Offer in Compromise OIC process.
Getting Into Compliance For Your Offer In Compromise OIC
To participate in the Offer program, you will be required to get into compliance with IRS standards. To be in compliance, you will need to do all of the following:
- File all required tax returns (individual and business returns if applicable),
- Pay all required estimates for the current tax year,
- If a wage-earner, adjust your withholdings to the appropriate amount, and
- Once an Offer is accepted, continue to file timely without a balance due on all returns for the next 5 years.
Failure to get into and remain in compliance will have many negative impacts on your Offer in Compromise. The IRS may return your initial Offer in Compromise submission if all of your required returns are not filed. They may also return an Offer once it comes up for negotiation if they determine that you have not paid the necessary taxes for the current year. If you fail to remain in compliance once your Offer has been accepted, the IRS can revoke the accepted Offer, putting all of the original tax balances, plus accrued interest and penalties, back on the taxpayer.
Preparing The Offer In Compromise- Getting Help From A Tax Relief Specialist
Once you are in compliance, the next step is to complete the IRS forms and prepare them for filing. The Offer in Compromise program is a very time-sensitive program. IRS Form 656-B contains all of the forms required to be filed with an Offer in Compromise. All of these forms need to be completed and signed to be filed with the IRS. You also must provide a large amount of supporting documentation to verify the information that you are providing to the IRS. It is important the forms are completed timely and accurately. Delay in completing your forms may result in your supporting information getting old. If this happens, you will need to go through the process of collecting and updating new information. Due to the large amount of information and the intricate rules and procedures of the IRS, it is highly advisable that you consult with a tax relief specialist before filing your Offer in Compromise OIC.
Once all of the forms are complete and you have your packet together, you are ready to file. The IRS requires a filing fee and 20% of the offered amount as calculated by your assets and future earning potential. You will need to provide checks for these amounts when the Offer is ready to file or the IRS will return your offer with no option for appeal.
After the Offer In Compromise is Filed
After the IRS has received your Offer, they will place a hold on your account so no further collection action will be taken on your account while going through the Offer process. Please note, the IRS has up to two years to review and negotiate your Offer. They will send out a letter stating a date when they anticipate contacting you, however, this is just an estimate. It may take several months before you are contacted regarding your Offer.
Once the IRS has assigned your case to an Offer Specialist, you will be contacted to negotiate out your Offer. You may be asked questions regarding the information on your forms or the IRS may ask you to send in additional supporting information. After reviewing and discussing your information, the IRS may accept your original Offer, come back with a recommendation for an increased Offer in Compromise amount or they may reject your OIC.
If the IRS determines that you can full-pay your liability, or if they determine that it is not in their best interest to accept your Offer, they will send out a rejection letter, giving you 30 days to file an appeal. If you do not agree with the IRS’s determination, you must timely file an appeal with your Offer Specialist. Once the IRS received your appeal, they will forward your Offer in Compromise on for further review and analysis. Your current Offer Specialist will no longer be assigned to the case and your Offer will be assigned out to a new, neutral third-party appeals representative. The appeals agent will review the original Offer submission, along with any new information submitted with your appeal. They again can accept the Offer, recommend an increased Offer amount, or agree with the original Offer Specialist and reject the proposed Offer.
The above information is intended to give you a broad idea of what to expect as you move through the Offer process. However, it is not intended to take the place of a qualified tax representative. As the Offer in Compromise is a complex and time-sensitive process, it is very important to find a tax resolution specialist that is qualified to represent you through the Offer process. To achieve the best results on an Offer, you need someone with experience in working with the IRS, that also knows and understands the IRS’s process for financial analysis. Of all the IRS programs, Offers in Compromises generally require the most amount of time, information, and cost for representation. Therefore, it is important to find the correct representative to give your Offer the best chance of success.
If you owe IRS more than $10,000 and want to see if you qualify for a tax debt relief program, contact our office to speak with a tax relief specialist. We will review your tax and financial situation to determine if you may qualify for an IRS Offer in Compromise OIC.
Disclaimer: Austin & Larson Tax Resolution has prepared this website for informational purposes only. This website is not intended to provide, and should not be relied on, for tax, legal, or accounting advice. To get advice regarding your specific tax situation or questions, please contact our office at 866-668-2953.