THE OFFER IN COMPROMISE - TAX RELIEF

If you cannot realistically pay off your tax debt, the IRS may consider accepting an offer in compromise (OIC). An offer in compromise allows a taxpayer to settle their debt for less than what they owe, with the settlement amount determined on the basis of what they can actually afford to pay.

There are three reasons the government will generally accept an OIC request:

Doubt as to Collectability

If the IRS doubts a taxpayer will ever have the ability to pay off their outstanding balance in full, they may consider declaring Doubt as to Collectability on the account. This involves an examination of your assets and income, which helps the IRS determine whether they’ll be able to collect more by enforcing traditional collection methods or by settling for an offer in compromise.

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Doubt as to Liability

Are you convinced your tax debt as presented by the Internal Revenue Service is incorrect? If you can prove that your assessed tax liability is wrong, thanks to examiner mistakes, missing information, or new information, the IRS will change the total tax owed to the appropriate amount. Community Tax professionals can help you determine if there’s any government fault in assessing your outstanding balance.

Effective Tax Administration

If a taxpayer isn’t contesting their collectability or liability but can prove that their current circumstances prevent them from paying their debt, or that doing so would cause undue hardship, the IRS may be more willing to accept an OIC request.

Do I Have to Pay Off My Offer in Compromise Balance Immediately?

Like installment agreement payment plans, offer in compromise payments can take a variety of forms; your balance may be paid off in full immediately, or you can apply for periodic payments that give you more time to make smaller payments.

There are three ways to pay off an offer in compromise:

Lump Sum Payments: If you elect to pay off your tax bill in lump sum payments, you’ll be required to pay off your total renegotiated tax bill within 5 payments. When filing Form 656, you must pay 20 percent of the total amount of the offer. Short-Term Periodic Payments: If you pay off your offer in compromise using short-term periodic payments, you must pay the entire amount off within a period of 24 months. The first payment must be submitted with the offer, and payments must be regularly during the offer investigation.

Deferred Periodic Payments: If you utilize a deferred periodic payment plan, then you’ll need to pay the total amount of the remaining statutory period for that tax assessment. Like short-term periodic payments, you must submit the first payment alongside your offer and make payments regularly while the Internal Revenue Service assesses your OIC.

Seeking professional help when handling back taxes can help you avoid the discussed errors. At Advance Tax Relief, we offer specialized tax resolution services to help you deal with IRS debt.

Our experts can help rectify erroneous tax bills and guide you in picking a suitable repayment program. Contact us today (713)300-3965 for back tax filing and tax relief services.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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