What Is An Offer In Compromise (OIC)?
An offer in compromise (deal) in Tuscaloosa AL is a contract in 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 quantities occurring under the Internal Revenue Code.
An offer in compromise permits you to settle your tax debt for less than the full amount you owe. It supplies eligible taxpayers with a course towards settling their tax debt and getting a “fresh start.” The supreme objective is a compromise that matches the very best interest of both the taxpayer and the IRS. To be considered, usually you need to make an appropriate offer based on what the IRS considers your real ability to pay. It might be a legitimate alternative if you can’t pay your complete tax liability, or doing so produces a monetary challenge.
A typical misconception or understanding thanks to advertisements 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 certainly obtain a lower settlement of your tax debt, these advertisements offer an inaccurate understanding that a lot of deals are suitable which most offers will be accepted (even improper offers).
The IRS considers your unique set of realities and circumstances. So it is very important that you have representation from a knowledgeable tax professional, such as The Tax Attorney Network, so that your interests are secured and that an appropriate offer is made based upon your:
Ability to pay;
The OIC application requires you to describe your monetary scenario in information, so before you continue you should want to make a complete and total disclosure in the above locations.
Eligibility For An Offer In Compromise in Tuscaloosa Alabama
Prior to the IRS will consider your deal, you must: (1) file all income tax return you are legally needed to submit, (2) make all needed estimated tax payments for the existing year, and (3) make all needed federal tax deposits for the present quarter if you are an entrepreneur with employees. In addition, you are not eligible if you are in an open insolvency proceeding.
The OIC program is an option for taxpayers who are not able to pay their tax amounts in a swelling sum or through an installation agreement and have actually tired their search for other payment plans. To qualify for the OIC program, taxpayers need to be able to demonstrate and show that their tax quantity can not be settled under either a lump sum or installment agreement for starters.
All other payment choices must be considered before submitting an offer in compromise. The Offer in Compromise program is not for everyone.
The IRS might lawfully compromise a tax liability for one of the following factors:
Doubt As To Liability: There is doubt as to whether or not the examined tax is correct.
Doubt As To Collectability: There is doubt that you could ever pay the full amount of the tax owed. In these cases, the total amount you owe must be greater than the amount of your properties and future income.
Promote Effective Tax Administration: There is no doubt that the examined tax is correct and no doubt that the quantity owed might be gathered, however you have a financial challenge or other unique situations which might permit the IRS to accept less than the balance due.
Lump Sum Cash: Must be paid within 5 or fewer installations within 5 or less months from notice of approval.
Short-term Periodic Payment: Must be paid within 24 months (2 years) from the date the IRS gets the OIC.
Usually, the IRS will not accept an offer if you can pay your tax debt in full through an installment agreement or a lump amount.
It is important to keep in mind that penalties and interest will continue to accrue throughout the offer examination procedure.