What Is An Offer In Compromise (OIC)?
An offer in compromise (offer) in Baytown TX is a contract between you (the taxpayer) and the IRS that settles a tax debt for less than the total owed. This uses to all taxes, including any interest, penalties, or extra quantities arising under the Internal Revenue Code.
An offer in compromise permits you to settle your tax debt for less than the full amount you owe. It offers eligible taxpayers with a course toward paying off their tax debt and getting a “fresh start.” The supreme objective is a compromise that fits the best interest of both the taxpayer and the IRS. To be considered, generally you must make a suitable offer based upon what the IRS considers your real capability to pay. It might be a genuine option if you can’t pay your complete tax liability, or doing so creates a monetary challenge.
A common myth or understanding thanks to advertisements is the impression that taxpayers can easily settle their tax liability “for cents on the dollar” through the offer in compromise program. While you can certainly acquire a lower settlement of your tax debt, these ads supply an inaccurate perception that many offers are suitable which the majority of deals will be accepted (even unsuitable offers).
The IRS considers your unique set of truths 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 protected which a suitable deal is made based upon your:
Ability to pay;
The OIC application needs you to describe your monetary scenario in detail, so before you proceed you need to want to make a full and total disclosure in the above areas.
Eligibility For An Offer In Compromise in Baytown Texas
Before the IRS will consider your offer, you need to: (1) file all tax returns you are legally required to submit, (2) make all needed approximated tax payments for the current year, and (3) make all needed federal tax deposits for the present quarter if you are a company owner with staff members. In addition, you are not qualified if you are in an open personal bankruptcy case.
The OIC program is an alternative for taxpayers who are not able to pay their tax amounts in a lump sum or through an installation contract and have actually tired their search for other payment plans. To qualify for the OIC program, taxpayers must have the ability to show and show that their tax amount can not be settled under either a swelling sum or installation agreement for starters.
All other payment choices should be considered prior to 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 reasons:
Doubt As To Liability: There is doubt as to whether or not the assessed tax is right.
Doubt As To Collectability: There is doubt that you might ever pay the total of the tax owed. In these cases, the overall quantity you owe need to be greater than the sum of your possessions and future income.
Promote Effective Tax Administration: There is no doubt that the examined tax is right and no doubt that the quantity owed could be collected, however you have a financial hardship or other special circumstances which might permit the IRS to accept less than the balance due.
Lump Sum Cash: Must be paid within 5 or fewer installations within 5 or less months from notification of acceptance.
Short-term Periodic Payment: Must be paid within 24 months (2 years) from the date the IRS receives the OIC.
Normally, the IRS will decline an offer if you can pay your tax debt completely through an installation contract or a swelling amount.
It is essential to note that penalties and interest will continue to accumulate throughout the offer examination procedure.