Tax Problems? Do You Qualify for Tax Relief Services?
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The IRS Offer in Compromise (OIC) program allows you to pay less than the amount you owe to Internal Revenue Service. The Internal Revenue Service, at its discretion, will let you pay less if they are not sure whether they will ever be able to recover the money from you or maybe there’s uncertainty regarding whether you’re accountable for the tax debt. With that said, here is what you should know about an offer in compromise.
How to apply for an Offer In Compromise?
You’ll need to fill in Form 656, which is the form for OIC, together with Form 433-AOIC, which is a Collection Information Statement. Additionally, you will need to calculate the payment amount you are offering towards the IRS using the Form 433 AOIC, which is a Worksheet.
What are the terms and conditions of the compromise made?
The Internal Revenue Service sets forth all of the Contractual Conditions in the OIC. Simply put, after signing the contract you agree to:
What can you do to avoid OIC being revoked?
Unless you follow all the conditions of the Offer contract, the Internal Revenue Service will revoke the OIC and reinstate the whole volume of tax liability. In the event the IRS revokes your OIC, they’ll reinstate the entire amount of your tax liability and add on the interest and penalty. Also, they might commence aggressive collection efforts. Should this happen they do allow time to file an Appeal before it is closed.
Is it possible for me to pay “pennies in the dollar” to settle my tax debts?
The advertising slogan, “pay pennies on the dollar,” may be misleading. For an OIC to be successful, an individual pays less than the whole sum of taxes, fees and interest he owes to the IRS. However, it is necessary for him to prove that the amount he or she is paying is equivalent or maybe more than the reasonable collection potential determined by the IRS. In a broader sense, the reasonable collection potential will be the IRS’ best guess on the amount of money you can put together in the following twenty-four months to settle your debts.
How long does it take to get an OIC application approved?
The process takes between one and two years to complete. Here is a timeline for an OIC:
Preparing the Offer in Compromise forms and backup documentation (1-4 months) IRS Processing the OIC (13-18 months)
Finalizing the Offer and Making Payment Arrangements (1-3 months)
In line with the newest statistics, the IRS needs at least 380 days to process the OIC. Your processing time might be shorter or more than this. To prevent the delay made in the approval, make sure that you have sent all the documents required.
What is the fee for submitting an OIC?
The Internal Revenue Service charges an end user fee of $186 to process an Offer in Compromise. You need to pay this fee whether you ready the Offer yourself or work with a tax professional. If the Offer is rejected or accepted the fee is non-refundable. There are exceptions for those with low income or already in Currently Non-Collectible (CNC) status, in that event the Service will waive the application fee. For those that are living below the poverty line, you can request a waiver by submitting form 656-A.
I’d prefer to prepare an OIC myself. What do I need to do?
For those that are willing to file OIC themselves, you will need to prepare IRS Form 656 and 433AOIC. Also, you will need to collect all the backup documentation. If you’re self-employed and requesting an offer for your business taxes, you might need to prepare IRS Forms 656 and 433AOIC, in addition, to form 433BOIC.
Where will I submit my OIC paperwork?
You will need to submit your OIC application along with all the supporting documentation to the IRS Service Center.
In case you are not considered eligible for an OIC, you should consider setting up an installment agreement with the IRS to resolve your tax debts. You might need to get some help from a tax professional to evaluate all the options you have for managing your tax debts.
Call us at 866-819-8482 for a free consultation.