Understanding the IRS Offer in Compromise
One of the options provided by the IRS for resolving tax debt is the Offer in Compromise (OIC), a program that allows taxpayers to settle their debt for an amount less than what is actually owed. Utilized correctly, the OIC can bring immense financial relief to taxpayers burdened with sizeable tax liabilities. Brightside Tax Relief, as a trusted nationwide tax relief company, has assisted numerous taxpayers in understanding and successfully navigating this process. We offer extensive knowledge and experience in tax debt resolution and will guide clients with Offer in Compromise tips to better their chances of acceptance.
The Basics of an Offer in Compromise
The IRS describes an Offer in Compromise as an agreement between a taxpayer and the federal government that settles the taxpayer’s tax liabilities for less than the total due. The OIC program is open to both individuals and businesses. However, the IRS only approves an OIC when they are convinced that the offered amount is the most they can expect to collect within a reasonable span of time.
Considerations for an Offer in Compromise
Before considering an OIC, it is important that taxpayers:
- Are not in an open bankruptcy proceeding
- Have filed all their tax returns and made all required estimated tax payments for the current year
- Have made all required federal tax deposits for the current quarter if they are a business owner with employees
Offer in Compromise Pre-Qualifier Tool
The IRS provides a pre-qualifier tool on their website to help taxpayers determine if they could be potentially eligible for an OIC. This tool can guide them to understand the preliminary requirements and essential criteria to be considered for an OIC. However, this should not be considered a guarantee of eligibility or acceptance, and professional assistance is often necessary to confirm qualification.
Offer in Compromise Tips
An Offer in Compromise can be an attractive option for taxpayers caught in a financial squeeze. But approval is not guaranteed and the process can be complex. To increase your chance of getting your OIC approved, Brightside Tax Relief suggests the below Offer in Compromise tips:
- Never hide any fibancial information: Any misrepresentation, delibrate or unintentional, can result in your OIC getting rejected.
- Make a reasonable offer: It should be based on your net worth and your ability to pay. Your offer should be something you can afford, but also demonstrate that you are serious about resolving your tax liability.
- Professional help provides an edge: A tax professional will help you understand your financial situation, structure your OIC application, suggest a reasonable offer amount, and guide you through the complex application process.
Rejection of an Offer in Compromise
It’s important to bear in mind that not all Offers in Compromise are accepted by the IRS. A rejection might occur due to various reasons such as insufficient documentation, inability to make minimum offer, or failure to meet tax compliance requirements, among other reasons. However, applicants have the option to appeal a rejection within 30 days of receiving the denial.
The Brightside Tax Relief Edge
Navigating tax relief options can be daunting – tax laws are complex and the process requires a careful understanding of your financial situation. That’s where Brightside Tax Relief comes in. We offer assistance and professional guidance to navigate the OIC application process. To learn more about OIC, visit the official IRS detailed application guide here.
An Offer in Compromise presents a genuine opportunity to settle your tax liabilities for less than the total amount owed. However, it’s not a one-size-fits-all solution and is not suitable for every taxpayer. It’s a complex process that requires careful planning and execution. If you’re considering an OIC, take advantage of our Offer in Compromise tips, and be fully aware of all the options available to you. Working with Brightside Tax Relief can help ensure you utilize the OIC to your best advantage.