What is the Offer in Compromise Program?
Radio and Television commercials can be very misleading. Unfortunately everyone does not qualify for and Offer in Compromise. Sometimes providing OIC Information to the IRS can reveal unnecessary details - that can be used against you.
The IRS may agree to settle a tax liability for less than the amount owed if they believe the liability cannot be paid in full or if there is doubt about the ability to collect the tax debt.
What is an Offer in Compromise?
Here is what you need to know before you file.
Driving in your car or watching television late at night -- you may have heard what may have sound like the answers to you prayers. "Settle your IRS Debt for Pennies on a dollar - all you have to do is just call".
If you think that late night commercials and televisions advertisement is confusing - wait until you search the internet for answers.
Google brings back close to 2.5 Million search results in the blink of an eye.
Many of these results are good. Some are bad. Some are just ads from companies that have sales people waiting for you to call.
Although there is nothing wrong with sale people or advertising for tax resolution services - as a consumer the IRS warns that you should perform due diligence before you move forward.
Before you do you may want to determine how many people are actually denied when they file for an Offer in compromise. Here are the results as last reported by the IRS.
Instead of satisfying your IRS tax debt you are hit with a "Triple Whammy" of trouble:
- You have paid high fees with no real results,
- The IRS has more information that can be used to aggressively collect taxes,
- Your penalty and interest continues to grow at an astronomical rate
The Truth about the Offer in Compromise Program
Offer in Compromise
The IRS may agree to settle a tax liability for less than the amount owed if they believe the liability cannot be paid in full or if there is doubt about the collectabilty of the tax debt.
The truth is that everyone doesn't qualify for an Offer in Compromise.
Sometimes negotiating an affordable payment plan is your best option (although some companies earn substanially more fees by having you to file and Offer in Compromise).
Even worse, providing unnecessary information to the IRS under the Offer in compromise actually helps them to better understand your income and assets in the event they decide to take aggressive actions to collect taxes due.
As a primer here is what the IRS has to say about the Offer in Compromise ....
The IRS, like most Federal Agencies, require that you speak with them in a manner that they understand. In this case the language of the agency is riddled with forms. For example:
You will be speaking with this form
and likely with this form
And because the IRS Assumes that are taxpayers and homes are cookie cutter they have issued national standards to limit your expenses using this form:
Suggesting National Standards for expenses
Because all Homes are cookie cutter, right?
But if you are not in a cookie cutter situation and have things like legitimate medical expenses that exceed the Collection Financial Standards there are still options ….
An Offer in Compromise is generally the most difficult tax settlement option to obtain -- but it also provides the largest benefit to the taxpayer.
What about Collection Activities?
Collection activities are generally halted while the offer is being considered. While the advertisement of many companies can be greatly exaggerated, the Offer in Compromise allows you to settle your tax debt for less than the full amount you owe - If you qualify. You should not file an Offer in Compromise if you do not qualify because now your complete and accurate financial information is now in the hands of the IRS.
The IRS considers your unique set of facts and circumstances including:
- Your Ability to pay,
- Your Income,
- Your Expenses.
- Your Assets / equity
The IRS will generally approve an offer in compromise when the amount offered represents the most they can expect to collect within a reasonable period of time.
The IRS willl issue a "30 day letter rejecting your Offer In compromise. Odds are you are going to have to provide more information during this period, request an appeal or take additional actions that may require a legal professional. It is always best to confirm with a specialist before filing to determine if an Offer in Compromise is your best option in resolving your tax issues.
As a primer here is what the IRS has to say about the Appeals Process ....