If you are looking for creative ways to get tax relief and resolve your tax debt, an offer in compromise is one of the options you may be considering, however, what happens after an offer in compromise is accepted?
Simply put, an offer in compromise gives you the liberty to settle a debt you owe the IRS for less than the amount you actually owe. it allows individuals who qualify for the program to negotiate a settled amount on their original tax debt and clear the amount owed.
After considering your ability to pay the debt, ( such as your income, and expenses), if you discover that you are not in a very good place financially, and thus may be unable to resolve the debt, this may be a good option for you.
In order to be eligible for an offer in compromise, you must have filed all required tax returns and not made any estimated payments. Once you are eligible, you should submit your offer and select a payment option.
The IRS will review your application and respond to you with either approval or rejection. If you are approved, knowing what to do next is key. After an offer in compromise is accepted, the first thing you’ll likely feel if relief. You must be careful not to let that relief slip into carelessness. Getting accepted doesn’t end it. You must adhere to the IRS conditions going forward.
After an offer in compromise is accepted, here are a few things you should know.
- Don’t let the last ordeal happen again.
Once your offer in compromise is accepted, you should not want to be contacted by IRS debt collectors again, as much as they do not want to have another issue with you either. To make this happen, you must stay current with all your tax filings and payments.
You do not want to default on your compromise, and that can happen if you fail to file your tax returns on time and make all your payments at the right time. You must be very intentional about adhering to your IRS filings and payment requirements or else they may be revoked.
- Your next tax refund is not coming to you.
After an offer in compromise is accepted, any tax refund the consumer should be getting goes directly to the IRS. If you qualify for the refund the same year the IRS accepts your offer in compromise, then the IRS gets the money.
- Release of Federal tax liens
Another thing that comes after an offer in compromise is accepted is the release of the federal tax liens the IRS had against you. The liens will be taken off your credit report, thereby improving your credit score. After you pay the amount you settled for, the IRS will completely release the lien.
- Get your transcript
The IRS will put a credit to your account for the debt that you owed after you make the final payment to them. You should call the IRS and request a copy of the transcript that shows that your balance owed is zero and you are released from any previous tax liens.
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