Offer in Compromise or OIC
If you owe a significant amount of taxes to the IRS and are unable to pay them, you may be interested to learn that there is something called an Offer in Compromise. An OIC is an agreement between a taxpayer and the IRS to settle the tax liabilities for less than the full amount owed. This probably sounds like a lifesaver, a dream to someone in a dire situation, and for most, it is just that. There are, however, circumstances in which you may qualify for this too-good-to-be-true tax relief.
The IRS Wants the Debt Satisfied
The IRS will do their best to collect on the debt owed. If a taxpayer is unable to pay the entire debt at once, the second option is to establish an installment plan. An installment plan allows the taxpayer to make smaller payments, usually monthly, until the entire debit is satisfied. Unless you can prove that you are unable to fulfill either one of these options, the IRS will not accept your request to pay less than you owe by filing an OIC.
Responsibilty is in Your Favor
This special compromise is generally only extended to taxpayers who have historically acted with responsibility. They will consider agreeing to an OIC for an individual or organization that has typically filed their tax returns and paid taxes on time every year. People or organizations with repeat tax problems and a poor history of payments stand very little chance of getting approved to pay less than they owe.
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There are only three situations or reasons that the IRS will accept an OIC:
- If there is some doubt that you are actually responsible for the debt, or the amount you owe is questionable.
- If there is doubt that the amount the IRS believes you owe is collectible. For example, if the taxpayer’s tax liability is higher than the value of their assets and income, they may deem the tax uncollectible.
- If paying the tax liability would create an economic hardship or would be unfair because of exceptional circumstances, the IRS may accept the OIC.
We can Help Your Offer in Compromise go Much Smoother
We, at CPA Accounting and Tax Services understand the complex requirements surrounding an OIC. We can help determine the likelihood of yours being accepted by the IRS and help you submit the required forms and documents. We will advise and guide you through the process, which often leads to the taxpayer in question, being under scrutiny until a decision is reached. We are here for you and are your best chance for success in this difficult time.
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- Offer in Compromise
- Non-Filed Tax Returns
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- Prior Year Returns
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