How to get an Offer in Compromise Approved?
When a taxpayer becomes delinquent on the tax money they owe to the IRS there are a number of things that can happen. Depending on the specifics of the case will generally determine what direction that the IRS is willing to go in order to get the case resolved. With so many factors that can affect a person's specific case, the way that you interact with the IRS during the OIC offer in compromise resolution process will go a long way in helping you get the best outcome.
One of the methods that the IRS offers to a taxpayer that is delinquent on a tax bill is what is called Offer in Compromise. This option is not one of the IRS's first choice, but it is definitely not its last option either. A taxpayer must meet a number of requirements in order to even qualify under the program and it is still totally up to the IRS person who is handling your specific case to decide if your circumstances warrant the offer of compromise from the IRS.
Get a free case evaluation by calling us at 877-788-2937.What exactly is an Offer in Compromise?
The Offer in Compromise is a program created by the IRS for the taxpayer who is in debt to the IRS for unpaid taxes. The compromise comes into play when it is determined that it is in the best interest of both parties to enter into a payment agreement that will have the taxpayer paying less than the total amount of taxes that are currently due. The information that the IRS uses to make the determination is taken from the checklist found on Form 656. Only the IRS can approve the final disposition of the OIC or Offer in Compromise. The Offer of Compromise involves a monthly payment that has been determined by the IRS.
Requirements of the Offer of Compromise ProgramHow to get an Offer in Compromise approved?
The OIC Program from the IRS features three unique requirements that have to be met in order for the IRS to even consider accepting the request for the Offer of Compromise. The IRS will take all of the information that is presented on Form 656 into consideration and it will use the following requirements to weigh their option.
#1 Doubt as to Liability - The requirement does not necessarily have anything to do with whether or not the taxpayer can pay the full amount. It could simply be that the taxpayer does not agree that they owe as much money in taxes that the IRS thinks that they do. This could easily lead the IRS to agree on a lesser amount to encourage the taxpayer to be able to pay some amount of money. There could even be laws that may apply to the paying back of the liability.
#2 Doubt as to collectability - In this requirement the taxpayer has to convince the IRS representative that it is highly unlikely that the taxpayer would be able to come up with the full amount. They go through everything with a fine tooth comb including total income, expenses, assets and liabilities in order to determine if the taxpayer has the financial means in order to repay the final amount of taxes owed. The IRS is looking to first determine if the taxpayer has the number of funds available in order to pay the full amount of tax debt owed. When determining the ability to repay the IRS looks at all sources of income that is being reported and subtract any expenses that it deems acceptable and if there are sufficient grounds to reduce the total owed, then make the final decision on whether or not what to do with the requested OIC.
#3 Paying the full amount would present a significant hardship - This requirement gives the taxpayer the best opportunity to convince the IRS that they really need to renegotiate a lower amount of money in order to make it less of a financial hardship on the taxpayer. If after analyzing all of the information that was included on Form 656 that accompanies the request for the Offer of Compromise. The government may also take into consideration a strong equity or public policy that it deemed worthy enough to enter into an Offer of Compromise.
Get a free case evaluation by calling us at 877-788-2937.Making the best case for an Offer of Compromise How to get an Offer in Compromise approved?
The goal of the Internal Revenue Service or IRS is to collect all of the tax money that individuals and businesses owe as required by all applicable tax laws. When there becomes a problem for a taxpayer and they are not able to pay the required tax the IRS will begin to build a case against them.
If you find yourself up against the IRS with a serious tax debt and you feel that you are not able to pay the full amount of the tax bill, you do have an avenue to request a reduction or even elimination of your tax debt entirely. The first step is the submit and request for an Offer of Compromise and fill out the Form 656 to go along with it. This form is what the IRS will use to determine your ability to repay the debt in full or if you should be granted a reduction in the total amount.
Whether they agree to the Offer of Compromise and set up a lower payment plan or turn you down a set the repayment plan based on the full amount. The outcome will more than likely hinge on the what information you include in the form as you fill it out.
Get a free case evaluation by calling us at 877-788-2937.
Mike Habib is an IRS licensed Enrolled Agent who owns and operates a specialized tax representation firm serving individual and business taxpayers resolve their back taxes through offer in compromise settlements in various metro areas such as Los Angeles, Whittier, Pasadena, Glendale, Burbank, Orange County, Riverside, Palm Springs, San Bernardino, Palmdale, Bakersfield, New York, New Jersey, Chicago, Houston, Phoenix, Philadelphia, San Antonio, San Diego, Dallas, San Jose, Detroit, Jacksonville, Indianapolis, San Francisco, Columbus, Austin, Memphis, Fort Worth, Baltimore, Charlotte, El Paso, Boston, Seattle, Washington DC, Milwaukee, Denver, Louisville, Jefferson, Las Vegas, Reno, Hempstead, Tucson, Nashville, Davidson, Portland, Tucson, Albuquerque, Santa Fe, Anchorage, Atlanta, Long Beach, Fresno, Sacramento, Mesa, Kansas City, Cleveland, Virginia Beach, Omaha, Miami, Oakland, Tulsa, Honolulu, Minneapolis, Pittsburgh, Colorado Springs, Arlington, Wichita, Birmingham, Montgomery, Tampa, Orlando.Local communities served:
OIC back tax settlements help for clients throughout Southern California including Whittier, Norwalk, Santa Fe Springs, Downey, Pico Rivera, Montebello, Hacienda Heights, La Habra Heights, West Covina, La Habra, Brea, Fullerton, Yorba Linda, Cerritos, La Mirada, Lakewood, Anaheim, Santa Ana, Long Beach, Compton, Torrance, Los Angeles, Pasadena, Beverly Hills, Santa Monica and throughout Los Angeles County, Newport Beach, Irvine, Orange County, Corona, San Bernardino County, Riverside County, the Inland Empire, the San Fernando Valley, Ventura county, and the San Gabriel Valley.