What Is An Offer In Compromise (OIC)?
An offer in compromise (offer) in Bloomington IN is a contract between you (the taxpayer) and the IRS that settles a tax debt for less than the full amount owed. This uses to all taxes, including any interest, penalties, or additional amounts occurring 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 provides 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 considered, normally you must make an appropriate offer based on what the IRS considers your real capability to pay. It might be a genuine choice if you can’t pay your full tax liability, or doing so creates a financial hardship.
A common misconception or understanding thanks to ads is the impression that taxpayers can quickly settle their tax liability “for cents on the dollar” through the offer in compromise program. While you can certainly obtain a lower settlement of your tax debt, these advertisements supply an incorrect perception that the majority of offers are proper which a lot of deals will be accepted (even inappropriate deals).
The IRS considers your unique set of realities and situations. So it is very important that you have representation from an experienced tax expert, such as The Tax Attorney Network, so that your interests are secured and that a suitable deal is made based upon your:
Ability to pay;
The OIC application requires you to describe your monetary situation in detail, so prior to you proceed you must be willing to make a complete and total disclosure in the above areas.
Eligibility For An Offer In Compromise in Bloomington Indiana
Before the IRS will consider your offer, you must: (1) file all tax returns you are lawfully needed to file, (2) make all required approximated tax payments for the current year, and (3) make all required federal tax deposits for the existing quarter if you are a company owner with staff members. In addition, you are not eligible if you remain in an open bankruptcy proceeding.
The OIC program is a choice for taxpayers who are unable to pay their tax amounts in a swelling amount or through an installation contract and have tired their search for other payment arrangements. To qualify for the OIC program, taxpayers must have the ability to show and prove that their tax amount can not be settled under either a swelling sum or installment arrangement for starters.
All other payment alternatives should be thought about before submitting an offer in compromise. The Offer in Compromise program is not for everyone.
The IRS may lawfully compromise a tax liability for one of the following factors:
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 could ever pay the full amount of the tax owed. In these cases, the total amount you owe must be greater than the amount of your assets and future earnings.
Promote Effective Tax Administration: There is no doubt that the assessed tax is proper and no doubt that the amount owed might be collected, but you have a financial difficulty or other unique situations which may permit the IRS to accept less than the balance due.
Lump Sum Cash: Must be paid within 5 or less installations within 5 or fewer months from notification of approval.
Short-term Periodic Payment: Must be paid within 24 months (2 years) from the date the IRS receives the OIC.
Usually, the IRS will not accept a deal if you can pay your tax debt completely through an installment contract or a swelling amount.
It is very important to note that penalties and interest will continue to accumulate throughout the offer examination procedure.