What is an offer in compromise and how can it help me with my tax debt relief?

A compromise offer allows you to pay off your tax debt for less than the full amount you owe. It can be a legitimate option if you can't pay your full tax liability, or if doing so creates financial difficulties. A commitment offer (OIC) is a payment plan that you can negotiate with the IRS to reduce your tax debt. With an OIC, you propose to pay a smaller amount to the IRS, depending on your ability to pay.

This is a good strategy, but keep in mind that it's not an easy or comfortable process. A commitment offer is a way to settle a tax debt with the IRS. You make an offer to pay, usually a small fraction of what you owe, and if the IRS accepts it, your tax bill is considered paid in full. When taxpayers can't pay their tax bill with their monthly assets and income, they may qualify to receive a commitment offer (OIC).

The OIC when in doubt about collectability is for people who are unlikely to be able to pay the IRS before their collection period expires (usually 10 years from the date the IRS evaluates the tax). The OIC allows them to settle their tax bill for less than the full amount. Most people won't qualify for an OIC unless they have filed all of their tax returns and made all the estimated tax payments required for the current year (if applicable). An IRS OIC is a proposal to pay the tax debt based on the amount calculated as the potential for reasonable collection (RCP).

To determine if using a tax professional is the right thing to do, you'll need to consider the size of your tax debt and the costs of the service. If you choose this path, the tax relief company will conduct an initial investigation into your tax problems to see if they can help you. With a compromise offer, you can pay off your tax debt with less than you currently owe (sometimes also with much less). He has been a leader in helping taxpayers and tax professionals resolve tax issues with the IRS, where he worked for 19 years in various compliance positions.

To qualify, a taxpayer must be unable to pay all of their tax liability or demonstrate that paying the full tax bill would cause financial hardship. The IRS can also accept an OIC in other circumstances, for example, if there are “doubts” as to liability, when paying the full tax bill would create economic hardship, or when exceptional circumstances would make paying the entire tax bill unfair and inequitable. You can also apply for currently uncollectible status, which suspends your tax debts due to your financial difficulties. Anyone can request a compromise offer, but getting help from a tax relief company can make the process easier, especially if you owe a large amount of money.

Before taking up his current position, Jim's consultancy focused on the areas of tax controversy and tax administration, including leading the development of software products on tax issues for tax professionals, testifying before Congress, advocating for the transparency and efficiency of the IRS, and proposing innovative solutions on a large scale for taxpayers and tax professionals. When evaluating an offer, the IRS will look at several factors, including your future income, your debts, your assets, and your overall ability to pay the tax debt. These amounts apply to tax liabilities and the taxpayer has the right to specify the particular tax obligations to which the periodic payments will apply. The IRS will return any OIC requests you recently filed if you haven't filed all of the required tax returns and haven't made any required estimated tax payments.

Lorraine Cernota
Lorraine Cernota

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