IRS Offer in Compromise
IRS Tax Relief Attorney
If you qualify, an Offer in Compromise (OIC) is frequently the best solution for resolving your past due tax debt. The most recent published IRS statistics show that the average discount on accepted OICs was 88% - 12 cents on the dollar. Given the savings possibilities on accepted OICs, our Tampa IRS tax relief attorneys thoroughly reviews your case to see if you qualify for an OIC.
The Offers in Compromise (OIC) is an IRS program created in 1992 by Section 7122 of the Tax Code. There are two main basis under which an OIC can be successfully negotiated with the IRS.
- Doubt as to Collectability - such as the taxpayer is unable to pay the full tax debt.
- Doubt as to Liability - the taxpayer claims that they do not owe the debt.
A recent third ground for acceptance is known as "Effective Tax Administration". In this situation the IRS wants to get as much as possible and they may believe that 12 cents on the dollar is as good as they can obtain from the taxpayer. For an OIC to be accepted, the burden of proof is with the taxpayer to show that they either have no possible means of paying the full tax or that they do not owe the tax.
Pursing an Offer in Compromise
The main determinant on "Doubt as to Collectability" is based on a taxpayer's personal financial profile (income, expenses, and assets). The IRS sets strict guidelines for income, allowable expenses (such as housing, living, and transportation expenses), and the available equity in personally owned assets.
An additional benefit of submitting an OIC is that IRS Restructuring Act prohibits the IRS from collecting a tax liability by liens & levies during the period in which the Offer is being processed, or 30 days following rejection of an offer, or during the appeal of an OIC. This time frame of non-collection is often a time for our clients to avoid IRS collection actions. This secures extra time for our clients to gather monies to pay and stops the IRS from seizing any assets while the OIC process winds its way thru the IRS maze.
If accepted, payment terms for an OIC are in one of two ways: Cash (usually 20% with submission of offer and 80% within ninety days of acceptance), or Deferred Payment (24 monthly payments starting with the submission of your offer).
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