If you insist on doing your own Offer in Compromise, here are some tips to get an IRS offer in Compromise accepted:
Check Your Eligibility:
The formula to check Offer in Compromise eligibility is: You will take the total income tax debt you owe, minus total assets (reduce your home value by 20%). Take the monthly available income times the months left in the Statute of Limitations (10 years after your assessment date). If this total is less than the total debt your client owes to the IRS less the assets, your client may qualify for an Offer in Compromise. Your Offer in Compromise amount will be 12 times the monthly available income.
Qualifying for an Offer in Compromise (OIC) does not mean a taxpayer will get their Offer in Compromise (OIC). Needless to say, to obtain an Offer in Compromise (OIC), you must be able to pay the settlement offer, which is the computed amount required to be paid to the IRS to settle your income tax debt.
Pre-Checks before submitting your Offer in Compromise application:
Your Offer in Compromise (OIC) application will go through a strict financial investigation. Don't think that you, with your limited knowledge, will outsmart the IRS. The IRS will evaluate your income, assets, expenses, and future earning potential. The IRS will even find out if there is any possibility that the taxpayer could pay off the whole debt in future. To avoid any discrepancies and rejection of application please you can follow the checklist below.
1: Before submitting your Offer in Compromise, please make sure that all of your income tax returns have been filed. All the IRS programs including the Offer in Compromise (OIC) are restricted to people who actually filed returns. If you are "non-compliant", you can't do anything with the IRS.
2: There cannot be any open bankruptcy proceedings against your client.
3: Double check all the number you fill in the forms. Every number you put on the form needs to be supported and these supporting documents must accompany the forms. The IRS requires 3 months of documentation.
Submit your Offer in Compromise:
Here are the steps to submit offer in compromise:
You’ll find step-by-step instructions and all the forms for submitting an offer in the Offer in Compromise Booklet, Form 656-B (PDF).
1: Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms;
2: Form 656(s) – individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656;
3: $186 application fee (non-refundable); and
4: Initial payment (non-refundable) for each Form 656.
Negotiating with IRS Agent (Offer in Compromise Examiner):
1: Although Offer in Compromise (OIC) applications can be submitted through the mail, but if you want to discuss some points with the IRS agent, you will have to call the IRS Offer in Compromise Examiner and review the form with them as well.
2: An experienced IRS Tax Attorney will know that the IRS trains their offer examiners to look out for the best interests of the government. The IRS is very good at pressuring. The job of the best IRS help team at Flat Fee Tax Service, Inc. is to not allow the IRS to intimidate and deal with their tactics confidently. Our IRS Tax Attorney(s) gives our clients the best of your service while we protect their rights at all times.
3: Our IRS Tax Attorney will prove to the IRS why you will not be able to pay off the entire income tax debt. Not any and every reason is going to work. We are trained to evaluate claims considering future possibilities. Disability, substance abuse problems, huge balance amounts, dependent care, limited income potential as a result of advanced age, or serious health matters are considered to be as good reasons.
During application review:
While the IRS reviews an Offer in Compromise (OIC) application, cannot accumulate more income tax debt. Keep paying the tax amount and don’t wait for an approval or rejection of your settlement offer (OIC). IRS takes it negatively if you add more tax debt while waiting for results of your application.
What if your Offer in Compromise gets rejected?:
If your settlement offer is rejected, it does not end all the possibilities of your getting a successful Offer in Compromise (OIC). You can apply again following the below points:
1: You may appeal a rejection within 30 days using Request for Appeal of Offer in Compromise, Form 13711 (PDF).
2: The online self-help tool may provide additional assistance on appealing your rejected offer.
3: Your letter should address the issues raised in the Offer in Compromise (OIC) rejection with a supporting document. If the your settlement offer gets accepted this time, you will have the opportunity to renegotiate their rejected offer under more acceptable terms for the IRS.
If you don’t hear back from the IRS within 2 years after submitting an offer, the Offer in Compromise (OIC) will be automatically accepted.