What Is An Offer In Compromise (OIC)?
An offer in compromise (offer) in Hammond IN is an arrangement in between you (the taxpayer) and the IRS that settles a tax debt for less than the full amount owed. This applies to all taxes, consisting of any interest, penalties, or additional quantities occurring under the Internal Revenue Code.
An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It provides eligible taxpayers with a path towards settling 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, typically you must make a proper offer based on what the IRS considers your true ability to pay. It might be a legitimate option if you can’t pay your full tax liability, or doing so creates a monetary difficulty.
A common misconception or understanding thanks to advertisements is the impression that taxpayers can quickly settle their tax liability “for pennies on the dollar” through the offer in compromise program. While you can certainly acquire a lower settlement of your tax debt, these advertisements offer an inaccurate perception that many deals are proper and that a lot of deals will be accepted (even unsuitable offers).
The IRS considers your distinct set of realities and scenarios. So it is important that you have representation from a skilled tax professional, such as The Tax Attorney Network, so that your interests are protected and that a proper offer is made based upon your:
Capability to pay;
The OIC application needs you to describe your financial situation in detail, so before you proceed you need to be willing to make a full and complete disclosure in the above areas.
Are You Eligible For An Offer In Compromise in Hammond Indiana
Before the IRS will consider your deal, you must: (1) file all income tax return you are legally required to submit, (2) make all required estimated tax payments for the current year, and (3) make all needed federal tax deposits for the existing quarter if you are a company owner with employees. In addition, you are not eligible if you remain in an open personal bankruptcy proceeding.
The OIC program is an alternative for taxpayers who are not able to pay their tax amounts in a lump amount or through an installment contract and have tired their look for other payment arrangements. To get approved for the OIC program, taxpayers need to be able to show and prove that their tax amount can not be settled under either a lump sum or installment contract for starters.
All other payment alternatives should be thought about before submitting an offer in compromise. The Offer in Compromise program is not for everybody.
The IRS may legally compromise a tax liability for among the following reasons:
Doubt As To Liability: There is doubt regarding whether or not the assessed tax is correct.
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 should be greater than the amount of your possessions and future income.
Promote Effective Tax Administration: There is no doubt that the assessed tax is appropriate and no doubt that the amount owed could be collected, but you have a financial difficulty or other special scenarios which might permit 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 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 agreement or a lump sum.
It is necessary to note that penalties and interest will continue to accrue during the offer examination process.