What Is An Offer In Compromise (OIC)?
An offer in compromise (offer) in Baton Rouge LA is an agreement between you (the taxpayer) and the IRS that settles a tax debt for less than the full amount owed. This applies to all taxes, including any interest, penalties, or extra amounts occurring under the Internal Revenue Code.
An offer in compromise enables you to settle your tax debt for less than the full amount you owe. It offers qualified taxpayers with a path towards paying off their tax debt and getting a “fresh start.” The ultimate objective is a compromise that suits the very best interest of both the taxpayer and the IRS. To be thought about, usually you should make a suitable deal based upon what the IRS considers your true capability to pay. It may be a genuine option if you can’t pay your full tax liability, or doing so creates a financial difficulty.
A typical myth or understanding thanks to advertisements is the impression that taxpayers can easily settle their tax liability “for pennies on the dollar” through the offer in compromise program. While you can certainly obtain a lower settlement of your tax debt, these ads provide an incorrect understanding that most deals are suitable which most deals will be accepted (even inappropriate deals).
The IRS considers your distinct set of realities and circumstances. So it is important that you have representation from an experienced tax expert, such as The Tax Attorney Network, so that your interests are secured which a proper deal is made based on your:
Ability to pay;
The OIC application requires you to explain your financial situation in detail, so before you continue you should want to make a complete and total disclosure in the above areas.
Are You Eligible For An Offer In Compromise in Baton Rouge Louisiana
Before the IRS will consider your offer, you should: (1) file all income tax return you are lawfully needed to file, (2) make all required estimated tax payments for the existing year, and (3) make all needed federal tax deposits for the existing quarter if you are a business owner with workers. In addition, you are not qualified if you are in an open bankruptcy proceeding.
The OIC program is an option for taxpayers who are not able to pay their tax amounts in a swelling amount or through an installment arrangement and have tired their search for other payment plans. To qualify for the OIC program, taxpayers must have the ability to demonstrate and show that their tax amount can not be settled under either a swelling amount or installment contract for starters.
All other payment choices must be considered before submitting an offer in compromise. The Offer in Compromise program is not for everyone.
The IRS might lawfully compromise a tax liability for among the following factors:
Doubt As To Liability: There is doubt as to whether the evaluated tax is proper.
Doubt As To Collectability: There is doubt that you could ever pay the total of the tax owed. In these cases, the total amount you owe should be higher than the sum of your assets and future earnings.
Promote Effective Tax Administration: There is no doubt that the evaluated tax is correct and no doubt that the quantity owed could be gathered, however you have a financial difficulty or other unique scenarios which may allow the IRS to accept less than the balance due.
Lump Sum Cash: Must be paid within 5 or less installations within 5 or less months from notice of approval.
Short Term Periodic Payment: Must be paid within 24 months (2 years) from the date the IRS gets the OIC.
Normally, the IRS will not accept a deal if you can pay your tax debt completely through an installation contract or a swelling sum.
It is necessary to note that penalties and interest will continue to accumulate throughout the deal assessment process.