Tax Relief Blog
Offer in Compromise
Often we feel a strange sense of desperation creeping in to our body, mind and soul that turns into a full scale panic attack. The reason…tax debts. It is not an uncommon fact; you are one of the millions of people each year who find that they owe taxes to the IRS. Tax professionals when asked for advice suggest “Offer-in-Compromise” as one of the ways to get relief from the taxes that one owes to the IRS.
What is Offer-in-Compromise?
You could say that it is a “blessing in disguise or an oasis in the desert”. It is a powerful settlement in lieu of a payment plan offered by the IRS when negotiated and accepted. In the words of IRS, 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 doing so creates a financial hardship. Simply put an offer in compromise is an agreement that is mutually agreed upon between the IRS and a taxpayer to settle the tax debts. An offer in compromise when applied for is often a lengthy and complicated process that takes a minimum of 4-9 months and up to two years to arrive at a successful resolution. Offer in compromise can be gotten from a variety of sources ranging from tax lawyers to books and Web sites. But because of its complexity that is involved in the filing process, a person who seeks offer in compromise should turn to a professional who has an extensive experience in the field.
What are the factors considered for offer in compromise?
The factors which are considered for offer in compromise are:
Whether the taxpayer has the ability to pay;
The equity a taxpayer has in his/her assets;
The taxpayer’s present and future income;
The taxpayer’s present and future expenses;
The probability of change in financial circumstances;
Whether the offer in compromise is in the best interest of the government.
How to File an Offer in Compromise?
Before filing for an offer in compromise, remember that the IRS will not accept any submitted offer if it finds out that you are in bankruptcy; or if you have not filed all required tax returns. Having said that, you have to submit bank statements of the past three/six months, all the checks that have been canceled, and contracts or leases that are relevant. To file for an offer in compromise, you must also fill out the Offer in Compromise Form 656 along with the collection information statement Form 433-OIC. To calculate your amount of offer you must use the Form 433-OICA Worksheet. Along with that you must also pay a fee of $150. If you want to make a lump sum offer or the first installment payment you must pay 20 percent calculated on the offer amount. If you are going through a financial crunch, the IRS will waive this fee and initial payment requirements provided you submit Form 656-A. When you make an offer in compromise, you must also agree to:
Pay the agreed offer amount.
You will file your tax returns and pay taxes on time for the next five years.
If there are any tax refunds, payments, and credits that you may have incurred prior to submitting your offer in compromise, you will allow the IRS to keep the same.
If by any chance your offer in compromise has been approved by the IRS and you have gained tax refunds during that calendar year you will allow the IRS to keep the same.
If you feel that you need more information or need help concerning this matter, Mike Habib can help you by arranging a free and confidential consultation to help you with your particular tax problem. Mike Habib, an IRS enrolled agent, ELP Endorsed Local Provider by Former Dave Ramsey ELP 2012-2019, and founder of the company https://www.myirstaxrelief.com will help you to get the tax issue settled once and for all. His goal is get the lowest offer in compromise settlement possible for you – his client.
We strive to provide the best Offer in Compromise settlement, tax resolution services and tax debt relief nationwide and in all 50 states including Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Guam, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.
