Offer in Compromise: What To Know
We understand the complexities of your tax burden and offer personalized assistance to help you get significant relief. The Offer in Compromise program is a hard-hitting tool from the IRS, providing a structured pathway to settle tax debts for less than the full amount.
Disclaimer: The information provided in this article is for educational and informational purposes only. It is not intended as legal or financial advice. For tax advice, contact tax professionals such as Colonial Tax Relief.
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What Is an Offer in Compromise (IRS)?
An Offer in Compromise (OIC) is a program offered by the IRS that allows taxpayers to settle their tax debts for less than the full amount owed. This program provides eligible individuals and businesses with the means to alleviate their financial burden and start fresh. This option is particularly helpful for those facing serious financial hardships.
Who Is Eligible for an IRS Offer in Compromise?
You may be eligible for an Offer in Compromise based on a comprehensive assessment of your financial situation. Here are key factors that influence eligibility:
- Financial Hardship: You need to demonstrate genuine financial hardship or exceptional circumstances that make it difficult for you to meet your tax obligations in full.
- Income Level: The IRS considers your current income and future earning potential to assess your ability to pay the full tax debt.
- Expenses: Your allowable living expenses, including basic necessities, are taken into account. The IRS uses standardized expense guidelines, but they may consider special circumstances.
- Asset Equity: The value of your assets, including property and investments, plays a role in your eligibility. The IRS assesses your equity in these assets when determining your eligibility.
- Overall Ability to Pay: The IRS evaluates your overall financial condition to decide whether accepting the offer is more advantageous than pursuing other collection methods.
If you meet these criteria and give the IRS accurate and verifiable financial information, you may be eligible for the Offer in Compromise program.
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How Much Should Your Offer in Compromise Include?
To calculate the right amount for your offer, the IRS considers your current and future income, allowable living expenses, and asset equity. We highly recommend professional help with reporting these details to the IRS, ensuring accuracy and enhancing your chances of a successful OIC application.
Negotiation is possible, and a strong argument and supporting documents can influence the outcome in your favor. Timely and accurate submission of your OIC package is essential as well, and regular reviews may be needed to adjust for any changes in your financial situation. The goal is to find a realistic compromise with the IRS and get to a place of financial stability.
Does an IRS Offer in Compromise Hurt Your Credit?
An IRS Offer in Compromise does not directly impact your credit score. Unlike some debt settlement programs, the IRS does not report accepted OICs to credit bureaus. However, make sure to manage your finances responsibly during and after the process, as any future failure to comply with tax obligations can still have negative effects on your credit.
How To Settle With the IRS by Yourself
Settling with the IRS by yourself involves thorough understanding of complex procedures, adherence to guidelines, and accurate financial documentation. Make sure you review IRS guidelines, gather necessary documents, and submit a well-prepared Offer in Compromise (OIC) proposal.
However, we always recommend professional help with settling. Our team’s expertise can increase your chances of a successful OIC application and facilitate a smoother resolution with the IRS.
We can help you navigate the nuances of your OIC application, optimize your settlement amount, and ensure compliance with IRS requirements, providing valuable support throughout the process. Schedule a call with one of our tax experts below.
Call (833) 829-2778 today for tax relief today!
How to Submit Your Application
To submit your Offer in Compromise (OIC) application and work toward tax debt relief, complete IRS Form 656, provide a detailed financial statement, and include supporting documentation. Ensure accurate information and pay the application fee unless eligible for a waiver.
What Happens After Applying?
- Thorough Review Process: After submitting your Offer in Compromise (OIC) application, the IRS conducts a comprehensive review, which may take several months.
- Stay Current on Tax Obligations: During the review period, it is crucial to stay current on your tax obligations. Failure to do so may adversely impact the outcome of your OIC.
- Notification of Decision: The IRS will notify you of their decision on your OIC. If accepted, adhere to the agreed-upon terms for the settlement amount and any additional conditions specified in the acceptance.
- Appeal Rights: If your OIC is rejected, you have the right to appeal the decision. Seeking professional advice, like that provided by Colonial Tax Relief, can guide you through the appeals process.
- Alternative Options: In case of rejection, explore alternative options for tax resolution. Professionals can assist in identifying and pursuing alternative strategies to address your tax debt effectively.
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