Offer In Compromise
If you qualify, you can settle your tax liabilities for less than the full amount. The Offer in Compromise is an agreement between you and the IRS that satisfies your tax liability in full.
The IRS will accept less than full payment under the following circumstances:
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Doubt as to Liability - Doubt exists that the assessed tax is correct.
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Doubt as to Collectability - Doubt exists that you could ever pay the full amount of tax owed.
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Effective Tax Administration - There is no doubt the tax is correct and no doubt the amount owed could be collected, but an exceptional circumstance exists. This could be an economic hardship or full payment would be unfair and inequitable.
The Offer in Compromise is a complicated and time consuming process and although you can do it on your own, we recommend strongly that you hire a licensed tax professional experienced in negotiating with the IRS, as your chance of success will be higher. The negotiations normally focus on the value of your assets (that's the amount the IRS believes they could collect from a quick sale), and accurate documentation of your monthly income and living expenses.
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There are three methods for paying your offer if it is accepted:
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Cash (paid in 90 days or less)
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Short-Term Deferred payment (more than 90 days, up to 24 months)
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Deferred Payment (terms over the remaining statutory period for collecting the tax)
When the IRS is reviewing your offer, they will withhold collection activities:
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While they investigate and evaluate the offer.
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For 30 days after they reject an offer.
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While you appeal an offer rejection.
Offers are processed in centers in Tennessee and New York depending upon where you live and the backlog at each of the two offer processing centers. The offer process may take from six months to one year depending upon a number of factors. During the period the offer is under consideration, the IRS may require additional information and failure to respond by the deadline will result in your offer being returned as unprocessed or rejected.
I Can't Pay What I Owe (Offer in Compromise)
What many taxpayers don't realize is just about everything is negotiable with the IRS - if you know how. The amount you owe may be reduced to an amount you can afford to pay with the help of our Tax Team.
If you qualify (see below), the IRS Program called Offer in Compromise (OIC) is an agreement between the taxpayer and the government that settles a tax liability (including all penalties and interest) for payment of less than the full amount owed. When the IRS accepts your Offer and you pay it, then all federal tax liens are removed. You must remain compliant by filing and paying your tax returns for the next five consecutive years, or the liability will be re-assessed and all penalties and interest will be assessed as well. If you do comply, though, you will get your life back!
The IRS will generally accept an OIC when it is unlikely that the tax liability can be collected in full and the amount offered reasonably reflects collection potential. An OIC is a legitimate alternative to declaring a case currently not collectible or to a "protracted installment agreement.". The IRS goal of an OIC is to achieve collection of what is potentially collectible at the earliest possible time and at the least cost to government.
Preparing and successfully negotiating an Offer in Compromise is a very complicated process and can take more than 6-18 months. Once your offer has been submitted to the IRS all collection activities against you stop.
An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances. A tax debt can be legally compromised for one of the following reasons:
Doubt as to Liability
Doubt exists that the assessed tax is correct.
Doubt as to Collect ability
Doubt exists that you could ever pay the full amount of tax owed.
Effective Tax Administration
There is no doubt the tax is correct, and no doubt that the amount owed could be collected, but an exceptional circumstance exists that allows the IRS to consider a taxpayer's OIC. To be eligible for a compromise on this basis, the taxpayer must demonstrate that collection of the tax would create an economic hardship or would be unfair and inequitable.
Review the step-by-step procedure followed by professionals that can help assist you.
Complete IRS Form 2848 Power of Attorney (POA). Without this form, a specialist can do nothing for you. IRS requires this form before they will talk to anyone other than you about your case. Fill in your name(s), address, and Social Security number(s) on page one, then sign and date page two. Understand that there is an IRS application fee of $150.00 for the Offer in Compromise (OIC) in addition to any representation fees.
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