What Is An Offer In Compromise (OIC)?
An offer in compromise (deal) in Tempe AZ is a contract between you (the taxpayer) and the IRS that settles a tax debt for less than the total owed. This applies to all taxes, consisting of any interest, penalties, or additional amounts occurring 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 qualified taxpayers with a course towards paying off their tax debt and getting a “fresh start.” The ultimate objective is a compromise that fits the best interest of both the taxpayer and the IRS. To be considered, typically you need to make a proper deal based upon what the IRS considers your real ability to pay. It might be a genuine alternative if you can’t pay your complete tax liability, or doing so develops a financial difficulty.
A typical 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 ads provide an inaccurate understanding that most offers are proper which many offers will be accepted (even inappropriate offers).
The IRS considers your distinct set of facts and situations. So it is necessary that you have representation from a knowledgeable tax expert, such as The Tax Attorney Network, so that your interests are secured which an appropriate offer is made based upon your:
Ability to pay;
The OIC application needs you to explain your financial situation in detail, so prior to you proceed you should want to make a full and complete disclosure in the above locations.
Are You Eligible For An Offer In Compromise in Tempe Arizona
Before the IRS will consider your deal, you need to: (1) file all income tax return you are lawfully required to file, (2) make all needed estimated tax payments for the existing year, and (3) make all required federal tax deposits for the present quarter if you are a business owner with staff members. In addition, you are not eligible if you remain in an open bankruptcy case.
The OIC program is an option for taxpayers who are unable to pay their tax quantities in a swelling sum or through an installation agreement and have actually exhausted their look for other payment arrangements. To qualify for the OIC program, taxpayers need to have the ability to demonstrate and show that their tax amount can not be settled under either a swelling sum or installation arrangement for beginners.
All other payment alternatives must be considered prior to sending an offer in compromise. The Offer in Compromise program is not for everybody.
The IRS may legally compromise a tax liability for one of the following factors:
Doubt As To Liability: There is doubt as to whether the evaluated 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 higher than the amount of your possessions and future earnings.
Promote Effective Tax Administration: There is no doubt that the examined tax is right and no doubt that the quantity owed could be collected, however you have a financial challenge or other unique scenarios which may permit 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 notification of acceptance.
Short-term Periodic Payment: Must be paid within 24 months (2 years) from the date the IRS receives the OIC.
Typically, the IRS will not accept a deal if you can pay your tax debt in full through an installment agreement or a lump sum.
It is important to keep in mind that penalties and interest will continue to accrue during the offer examination procedure.