The Basics of Offer in Compromise

Ultimately, what you are trying to gain when you submit an Offer in Compromise (OIC) is a settlement or possibly the eradication of your tax debt to the IRS. This compromise implies that the two parties have decided that the agreement is in their best interest. The parties concerned are you, as the taxpayer and the government who is represented by the IRS.

Generally, the IRS entertains applications for OIC so that unpaid debts can be settled at a lower amount. On the other hand, this offer will only be considered if there is reliable proof that the full amount cannot be collected from you anymore. In this process, you are to notify the IRS of the amount that you feel you can afford to pay and this should be a reasonable estimation. A higher approximation is required if your likelihood of paying the full amount is greater.

If you want to file for an Offer in Compromise, be certain that you have filed your tax returns in the years applicable to the said request. The government will only accept OIC requests if you can present to them your official tax returns and an estimate of your earnings, even if they have records of these pieces of information. Filing for tax returns should be diligently done to avoid IRS problems, including imprisonment.

It is wrong to believe that the OIC is largely about how much taxes is owed from the government. In fact, an Offer in Compromise is essentially about how much the IRS believes they will be able to collect from you. Applicants of this said payment scheme should demonstrate that they will no longer be able to pay more than the figures indicated in the OIC. The likelihood of getting an approval for this request increases when the requirements are conscientiously followed.

The IRS will continue with its attempts to collect money from you even if you are still waiting for the decision on your OIC. They will resort to more serious collection methods such as wage garnishments and tax levies. Good thing that you can make use of the Collection Due Process Appeal, which gives you the chance to appeal to any of these IRS endeavors. During the time when the actual appeal is happening, you may use payment plans and your OIC as alternatives to the collection methods that the IRS has implemented on you.

In conclusion, believe that tax debts, notwithstanding its amount, will be eventually settled. Even if the IRS deems that you are capable of paying the full amount, if you can adequately demonstrate otherwise, you will still be able to put an end to these tax problems. Let the IRS realize that a tax settlement will keep overhead costs lesser, and they will surely take this alternative as this is necessary for effective tax administration.