Offers In Compromise
And Offer in Compromise (OIC) is an option for paying less than the amount the IRS says you owe. The IRS accepts an OIC when they agree that the assessed tax bill is not accurate, you don’t have sufficient assets and income to pay the tax, or paying the tax will create a substantial hardship or be unjust for you. The IRS will make this determination based on your unique facts and circumstance. After evaluating those facts and circumstances, the OIC is approved if the IRS determines that the amount in your offer is the most they will be able to collect from you within a reasonable time.
Before an OIC is submitted it’s a good idea to make sure you’re eligible. For instance, you have to be current with all filing and payment requirements before you can submit an OIC. In addition, if you are in an open bankruptcy proceeding, then an OIC is not an option for you. Finally, if you are self-employed and have employees, you must have submitted all required federal tax deposits prior to filing an OIC.
If you qualify, your OIC will consist of a few forms that will need to be completed. The type of form depends on if you are submitting as an individual or on behalf of your business. You will also need to include an application fee of $186 and an initial non-refundable payment. The initial payment varies based on your offer and the payment option you request. There are two payment options. The first is a 20 percent initial payment, then if your offer is accepted, you pay the remaining balance in five or fewer payments. Or you can pay an initial payment and continue to pay that amount while the IRS considers your offer. If they accept then you will continue to pay that same amount on a monthly basis until the amount is paid in full.
Filing an OIC suspends current collection activity, but lengthens the legal assessment and collection period. Still, a Notice of Federal Tax Lien may be filed. If you make an OIC and the IRS does not make a determination within two years, then your OIC is deemed to be automatically accepted.
If you have a tax bill from the IRS, want to consider making an Offer in Compromise to settle the debt with the IRS and need to discuss you options with a tax attorney then schedule your free consultation by calling (480) 888-7111 or submit a web request here.