What Is An Offer In Compromise (OIC)?
An offer in compromise (offer) in Prescott AZ is a contract in between you (the taxpayer) and the IRS that settles a tax debt for less than the total owed. This uses to all taxes, consisting of any interest, penalties, or additional amounts developing 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 eligible taxpayers with a path toward settling their tax debt and getting a “fresh start.” The supreme goal is a compromise that fits 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 ability to pay. It might be a legitimate option if you can’t pay your full tax liability, or doing so produces a financial difficulty.
A typical misconception or understanding thanks to advertisements is the impression that taxpayers can easily settle their tax liability “for pennies on the dollar” through the offer in compromise program. While you can certainly get a lower settlement of your tax debt, these ads provide an inaccurate perception that most offers are proper which the majority of offers will be accepted (even improper deals).
The IRS considers your special set of realities and scenarios. So it is important that you have representation from an experienced tax expert, such as The Tax Attorney Network, so that your interests are safeguarded which a suitable offer is made based on your:
Capability to pay;
The OIC application needs you to describe your monetary situation in information, so before you proceed you must want to make a full and total disclosure in the above locations.
Are You Eligible For An Offer In Compromise in Prescott Arizona
Before the IRS will consider your offer, you must: (1) submit all tax returns you are lawfully required to file, (2) make all required approximated tax payments for the existing 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 case.
The OIC program is a choice for taxpayers who are not able to pay their tax quantities in a lump sum or through an installation contract and have tired their search for other payment plans. To qualify for the OIC program, taxpayers should be able to demonstrate and show that their tax amount can not be settled under either a lump amount or installment arrangement for starters.
All other payment choices must be considered before sending an offer in compromise. The Offer in Compromise program is not for everybody.
The IRS might lawfully compromise a tax liability for one of the following reasons:
Doubt As To Liability: There is doubt regarding whether the examined 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 total amount you owe must be greater than the sum of your possessions and future income.
Promote Effective Tax Administration: There is no doubt that the examined tax is correct and no doubt that the amount owed might be gathered, but you have an economic difficulty or other special circumstances which may enable the IRS to accept less than the balance due.
Lump Sum Cash: Must be paid within 5 or fewer installments within 5 or fewer 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.
Generally, the IRS will not accept a deal if you can pay your tax debt in full through an installment agreement or a swelling sum.
It is important to note that penalties and interest will continue to accrue during the offer examination process.