An offer in compromise, simply put, is a program offered by the IRS in which you can settle your tax debt for less than the amount you initially owed. If you have ever wished that you could settle your back taxes for less than the amount you actually owe, then an offer in compromise may just be the right step for you to take.
Sounds too good to be true? Maybe. However, it is important to note that this is a legitimate tax relief program offered to certain qualified taxpayers by the IRS. The major reason why the IRS agrees to an offer in compromise is if there is a doubt as to liability. What this means is that there is a dispute as to the existence of the debt or the correct amount permitted by law. The IRS may also accept an offer in compromise if there is a *** reason to believe that the amount owed in taxes by the taxpayer is not fully collectible.
How do you qualify for an Offer in Compromise?
The first step to take towards discovering whether or not you qualify for an offer in compromise is to file all your missing tax returns. This step is crucial because the IRS has a statute of limitations during which it can pursue you for taxes owed; generally speaking, this is 10 years from the date that your tax debt was accessed. These assessments usually happen when you file a tax return, therefore, if you have never filed a tax return, the statute of limitations clock on your debt has not started ticking; therefore, the IRS has an unlimited amount of time to pursue you for the taxes you owe. You also need to file all your tax returns so as to ascertain whether or not you owe any taxes on the tax returns.
The second step to qualify for an Offer in Compromise is to ensure that you are paying the accurate amount of taxes moving forward. For employees, this involves adjusting your withholdings to ensure that you’re paying the correct amount of tax in each paycheck, and if you are self-employed, this involves paying your estimated quarterly tax payments.
The next step would be for us to determine how much you own in assets. If we determine that you hold assets that sum up to an amount higher than what you owe to the IRS, the chances that the IRS will not accept an Offer in Compromise are much higher.
Payment Options under an Offer in Compromise
There are two payment options available to taxpayers who opt for an offer in compromise. They are:
- Lump-sum cash offer
- Periodic Payment Offer
A lump-sum cash offer is payable in 5 or fewer instalments within 5 or fewer months starting from when the offer is accepted. The taxpayer who opts for a lump sum cash offer must put down 20% of the offer amount in addition to the application fee. It should be noted that this amount is non-refundable, meaning that it will not be refunded to the taxpayer even if the offer is rejected.
A periodic payment offer, on the other hand, is payable in 6 or more monthly instalments. The limit for payment on a periodic payment offer is 24 months from the date the application was approved. If you decide to opt for a periodic payment offer, you must include the first periodic instalment payment along with your application form. You must also never miss a payment, or else the offer might be revoked.
How do we work?
A as a professional tax relief firm, we will first access your financial situation and tax transcripts to determine whether or not an offer in compromise is the best option for you.
We will advise you regarding which steps to take next only after we have thoroughly analyzed your financial situation in comparison to the IRS standards for OIC approval. We do this to determine your chances of qualifying for an offer in compromise.
We will also help you determine what amount is most likely going to be accepted by the IRS, and work hand-in-hand with you to ensure that you can afford to meet up with those payments. We will then proceed to file all the required paperwork on your behalf and make the request for an OIC which will halt the collection process while we wait for a response from the IRS.
Why struggle with tax debt when we are only one phone call away? Call us today to schedule a free consultation.