What Is An Offer In Compromise (OIC)?
An offer in compromise (offer) in Rock Island IL is an arrangement between you (the taxpayer) and the IRS that settles a tax debt for less than the total owed. This applies to all taxes, including 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 provides qualified taxpayers with a path toward paying off their tax debt and getting a “fresh start.” The ultimate goal is a compromise that matches the best interest of both the taxpayer and the IRS. To be thought about, normally you should make a proper offer based on what the IRS considers your true capability to pay. It may be a genuine option if you can’t pay your full tax liability, or doing so produces a financial difficulty.
A common misconception or perception 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 certainly acquire a lower settlement of your tax debt, these advertisements provide an inaccurate perception that the majority of offers are suitable which most offers will be accepted (even inappropriate deals).
The IRS considers your distinct set of realities and circumstances. So it is essential that you have representation from a knowledgeable tax expert, such as The Tax Attorney Network, so that your interests are protected which a suitable deal is made based on your:
Ability to pay;
The OIC application requires you to explain your financial circumstance in information, so prior to you continue you must want to make a full and complete disclosure in the above areas.
Eligibility For An Offer In Compromise in Rock Island Illinois
Prior to the IRS will consider your offer, you should: (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 required federal tax deposits for the current quarter if you are a business owner with staff members. In addition, you are not eligible if you are in an open personal bankruptcy case.
The OIC program is a choice for taxpayers who are not able to pay their tax quantities in a lump amount or through an installation contract and have actually exhausted their search for other payment plans. To receive the OIC program, taxpayers should have the ability to show and show that their tax quantity can not be settled under either a lump amount or installment arrangement for starters.
All other payment options should be thought about prior to sending an offer in compromise. The Offer in Compromise program is not for everybody.
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 right.
Doubt As To Collectability: There is doubt that you could ever pay the total of the tax owed. In these cases, the total amount you owe must be greater than the amount of your assets and future earnings.
Promote Effective Tax Administration: There is no doubt that the evaluated tax is proper and no doubt that the amount owed could be gathered, however you have a financial challenge or other unique circumstances which may enable the IRS to accept less than the balance due.
Lump Sum Cash: Must be paid within 5 or less installations 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 receives the OIC.
Usually, the IRS will decline an offer if you can pay your tax debt in full through an installation arrangement or a lump sum.
It is essential to keep in mind that penalties and interest will continue to accumulate during the offer assessment process.