What Is An Offer In Compromise (OIC)?
An offer in compromise (deal) in Grand Rapids MI 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 extra amounts emerging 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 eligible taxpayers with a course toward settling their tax debt and getting a “fresh start.” The supreme objective is a compromise that suits the best interest of both the taxpayer and the IRS. To be thought about, typically you need to make a suitable offer based upon what the IRS considers your true capability to pay. It might be a legitimate choice if you can’t pay your complete tax liability, or doing so creates a monetary hardship.
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 definitely obtain a lower settlement of your tax debt, these advertisements offer an inaccurate understanding that many offers are proper and that many deals will be accepted (even improper offers).
The IRS considers your distinct set of realities and circumstances. So it is important that you have representation from a knowledgeable tax professional, such as The Tax Attorney Network, so that your interests are protected which a suitable offer is made based upon your:
Ability to pay;
The OIC application requires you to explain your financial situation in detail, so prior to you continue you need to be willing to make a complete and total disclosure in the above locations.
Are You Eligible For An Offer In Compromise in Grand Rapids Michigan
Before the IRS will consider your deal, you should: (1) file all income tax return you are legally required to file, (2) make all needed approximated tax payments for the existing year, and (3) make all needed federal tax deposits for the present quarter if you are a business owner with staff members. In addition, you are not eligible if you are in an open insolvency proceeding.
The OIC program is a choice for taxpayers who are not able to pay their tax quantities in a swelling sum or through an installation arrangement and have exhausted their look for other payment plans. To qualify for the OIC program, taxpayers should be able to show and prove that their tax amount can not be settled under either a lump amount or installation agreement for starters.
All other payment alternatives need to be considered prior to sending an offer in compromise. The Offer in Compromise program is not for everyone.
The IRS may legally compromise a tax liability for among the following reasons:
Doubt As To Liability: There is doubt as to whether the assessed 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 quantity you owe must be higher than the amount of your assets and future earnings.
Promote Effective Tax Administration: There is no doubt that the examined tax is right and no doubt that the quantity owed might be collected, but you have a financial hardship or other special scenarios which might allow 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 notice of acceptance.
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 an offer if you can pay your tax debt completely through an installment contract or a lump amount.
It is very important to note that penalties and interest will continue to accumulate during the deal examination procedure.