What Is An Offer In Compromise (OIC)?
An offer in compromise (deal) in Phoenix AZ is an arrangement 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 allows you to settle your tax debt for less than the total you owe. It supplies qualified taxpayers with a path towards settling their tax debt and getting a “fresh start.” The ultimate goal is a compromise that suits the best interest of both the taxpayer and the IRS. To be considered, usually you need to make a suitable offer based on what the IRS considers your real ability to pay. It might be a genuine option if you can’t pay your full tax liability, or doing so produces a financial difficulty.
A common myth or understanding thanks to ads 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 acquire a lower settlement of your tax debt, these ads provide an inaccurate perception that the majority of deals are appropriate which a lot of offers will be accepted (even unsuitable deals).
The IRS considers your unique set of truths and situations. So it is essential that you have representation from an experienced tax expert, such as The Tax Attorney Network, so that your interests are safeguarded which an appropriate offer is made based upon your:
Ability to pay;
The OIC application needs you to explain your monetary situation in information, so before you proceed you must want to make a full and total disclosure in the above areas.
Are You Eligible For An Offer In Compromise in Phoenix Arizona
Prior to the IRS will consider your offer, you must: (1) file all income tax return you are lawfully needed to file, (2) make all required approximated tax payments for the present year, and (3) make all required federal tax deposits for the present quarter if you are a company owner with employees. In addition, you are not qualified if you remain in an open bankruptcy proceeding.
The OIC program is an alternative for taxpayers who are unable to pay their tax amounts in a lump sum or through an installation contract and have actually exhausted their search for other payment plans. To qualify for the OIC program, taxpayers must be able to show and prove 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 sending 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 the assessed tax is appropriate.
Doubt As To Collectability: There is doubt that you could ever pay the total of the tax owed. In these cases, the overall amount you owe need to be higher than the sum of your properties and future earnings.
Promote Effective Tax Administration: There is no doubt that the evaluated tax is correct and no doubt that the quantity owed might be gathered, but you have a financial hardship or other unique situations which might enable 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 gets the OIC.
Typically, the IRS will not accept a deal if you can pay your tax debt in full through an installation contract or a swelling amount.
It is important to keep in mind that penalties and interest will continue to accrue throughout the offer assessment process.