Figuring out how you, a financially struggling taxpayer, will be receiving income tax help can be tricky. You have day to day expenses such as rent, a car payment, groceries, utilities, day care and any other debts (child support, alimony, health insurance) to worry about. If you’ve never had an income tax problem with the IRS, an “Offer in Compromise” may not be a phrase you’re familiar with. This is just one of the options that can make handling your IRS tax debt a lot simpler and affordable to get tax relief.
Often, mistakenly, called “Offer and Compromise”, an Offer in Compromise is a settlement agreement between you – the taxpayer and the IRS. This allows you to resolve your income tax debt for far less than you owe. This can be a great solution for you, provided you qualify. The IRS doesn't call it the "Fresh Start Initiative" for nothing.
When you attempt an Offer in Compromise (OIC), IRS scrutiny is to be expected. The IRS is not going to settle your income tax debt without proof that you are struggling. This means that you’ll be required to hand over a detailed financial report, itemizing your revenue streams as well as your monthly expenses. If approved by the IRS, Offer in Compromise (OIC) conditions must be met to the letter or your settlement will be invalidated.
Again, not to be confused with the nonexistent IRS “offer and compromise”, an actual Offer in Compromise (OIC) doesn’t work in a typical negotiation fashion. In other words, you don’t barter for a lower total to pay back. After reviewing your application for an IRS settlement, IRS officials may take as long as a year to determine whether or not you’ll be approved. We always tell our clients that the Offer in Compromise process is a lot like "watching paint dry."
Beyond meeting the terms of your settlement agreement, you shouldn’t bank on being qualified. Although many requests are made to the IRS, compromise offers account for only a small percentage of formal tax debt resolutions each year. Currently, the IRS is accepting 42% of the Offer in Compromise submissions.
When you’re considering an Offer in Compromise, help from an experienced tax resolution professional is definitely going to be your best course of action. But don’t be discouraged if your tax pro concludes that you’re not likely to be approved for an Offer in Compromise; IRS tax defense resolutions abound, based on your circumstances. So rather than testing the waters by completing 433a Offer in Compromise (OIC) yourself, ask our IRS Tax Relief Team if that’s your best move. You may be provided with a solution that is even better for your situation.
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