Offer In Compromise, known as an OIC, is a program by the Internal Revenue Service (IRS) which allows taxpayers to settle their unpaid tax liability for a lesser amount in order to clear their total tax debt owed. Know What is an Offer In Compromise
In order to qualify for an OIC, some of the basic requirements must be met such as:
• You do not have the ability to pay off your income tax debt by either full payment of the tax or in terms of a payment plan.
• You must file and pay all your tax returns by the due date each year. No extension allowed.
• If you are self-employed, you must be current with your Estimated Tax Deposit (ETD) payments. The four quarterly ETD payments must be made on time.
• You must submit an OIC application with your offer and submit a 20% down payment of the offered amount if it is a cash offer, to be paid in 5 months or less after the acceptance. You can also opt for a 24-month periodic offer and must make payments every month while the offer is being processed by the IRS. Some taxpayers may not have to make a down payment of the offered amount with the offer application, based on their monthly income and the family size.
A question that often comes to mind is, “Is this something that I can do myself”? The answer is yes, a taxpayer can approach an OIC themselves, however, the chances of the offer being accepted can be very low. We recommend hiring a tax professional during the process of the OIC because a tax professional is aware of the IRS laws, codes and all the rules that are applicable for the OIC.
The IRS has an Internal Revenue Manuel (IRM) which has the guidelines under which an offer should be accepted. For example, a tax professional will be aware that credit card expenses are not allowed as an expense for the OIC unless the credit card was used to pay for medical expenses, etc. Charitable contributions are also not considered an expense for OIC purposes. The taxpayer must also be paying on their monthly expenses to be allowed during the OIC process. For example, an unpaid student loan with no active recurring monthly payment will not be allowed as an expense.
At Life back Tax, we have years of experience in dealing with the IRS and the OIC process. We have saved our clients millions of dollars with the OIC program. If you owe the IRS, we encourage you to seek the help of a tax professional. For any questions, please feel free to reach out to us at 1-855-605-1500.
visit: https://lifebacktax.com/offer-in-compromise-with-irs