Offer in Compromise
What is Offer in Compromise?
In 1992 the IRS added an option to the tax code called an Offer in Compromise “OIC”. An OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax debt for less than the amount owed. There are three types of OIC. Doubt as to collectability, doubt to liability and Effective Tax Administration.
The California Franchise Tax Board has a similar program modeled off of the IRS OIC.
When an Offer in Compromise is accepted, it can be a godsend. However, it is not a solution that works for everyone. To qualify, you must be able to show the IRS you can’t, or shouldn’t be required to pay the debt.
This solution sounds too good to be true. How do I qualify?
The simple answer is you can show you cannot repay the tax you probably can settle with OIC. The IRS takes over 40 factors into consideration in making their decision. There are methods for increasing your chances of acceptance, and reducing the amount of an OIC.
Is it easy to file and be approved for an Offer in Compromise by the IRS?
Filing is pretty straight forward, acceptance is somewhat more complicated. A reputable tax professional should be able to tell you after a conversation if you are a good candidate for acceptance, and there are many other options if you are not. Pick up the phone for a FREE consultation regarding OIC.
Utilizing professional help will significantly increase your approval chances.
But I should still consider applying, right?
Not necessarily. An OIC may not even be your best option. You need to research the debt, the date of the debt, the current status of your account with the IRS etc. Partial Payment Plans, Non-collectible, Bankruptcy are all options that is some cases are BETTER than an OIC.
Professional tax relief experts at Tax Relief Advisers, LLC will be able to provide advice on how to best manage your situation.