What Is An Offer In Compromise (OIC)?
An offer in compromise (offer) in Kirkland WA is a contract 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, including any interest, penalties, or additional amounts arising 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 supplies eligible taxpayers with a path towards paying off their tax debt and getting a “fresh start.” The ultimate goal is a compromise that matches the very best interest of both the taxpayer and the IRS. To be considered, usually you must make a proper offer based upon what the IRS considers your real capability to pay. It might be a legitimate option if you can’t pay your complete tax liability, or doing so produces a monetary difficulty.
A common misconception or understanding thanks to ads 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 definitely acquire a lower settlement of your tax debt, these ads provide an inaccurate understanding that most deals are appropriate which the majority of deals will be accepted (even inappropriate offers).
The IRS considers your distinct 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 protected which an appropriate deal is made based on your:
Capability to pay;
The OIC application requires you to explain your financial situation in information, so prior to you continue you should want to make a full and total disclosure in the above locations.
Eligibility For An Offer In Compromise in Kirkland Washington
Before the IRS will consider your offer, you need to: (1) submit all tax returns you are legally needed to submit, (2) make all required approximated tax payments for the current year, and (3) make all required federal tax deposits for the present quarter if you are an entrepreneur with staff members. In addition, you are not qualified if you remain in an open bankruptcy case.
The OIC program is a choice for taxpayers who are unable to pay their tax amounts in a lump sum or through an installation contract and have exhausted 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 lump sum or installation arrangement for beginners.
All other payment choices should be considered before submitting an offer in compromise. The Offer in Compromise program is not for everyone.
The IRS may lawfully compromise a tax liability for among the following factors:
Doubt As To Liability: There is doubt regarding whether the evaluated tax is appropriate.
Doubt As To Collectability: There is doubt that you might ever pay the full amount of the tax owed. In these cases, the overall amount you owe must be greater than the amount of your possessions and future income.
Promote Effective Tax Administration: There is no doubt that the evaluated tax is proper and no doubt that the amount owed could be gathered, but you have a financial difficulty or other unique situations which might 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 notification of approval.
Short-term Periodic Payment: Must be paid within 24 months (2 years) from the date the IRS receives the OIC.
Generally, 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 keep in mind that penalties and interest will continue to accumulate during the offer examination process.