IRS Settlement Tips - Your Foolproof Guide to Having Your Offer in Compromise Accepted
Updated: Apr 18, 2019
IRS SETTLEMENT TIPS - OFFER IN COMPROMISE GUIDE
Offer in Compromise is an IRS settlement agreement administered by the Internal Revenue Service which allows taxpayers to settle their tax debt for far less than the full amount they owe which essentially provide the taxpayer a fresh start with the IRS.
For tax professionals, like the IRS Tax Attorneys at Flat Fee Tax Service, Inc., this is a very important program we provide for clients that are struggling to pay their state or federal tax debt.
Is an Offer in Compromise Right for Our Client?
The Offer in Compromise (“OIC”) program was created by the IRS to allow taxpayers to settle their outstanding tax debt with the IRS for a lower, agreed-upon amount than what was originally owed. The idea behind the IRS debt settlement program is that many taxpayers cannot pay their tax liability without creating a financial hardship for themselves and their immediate household.
In order to obtain an Offer in Compromise (OIC), a taxpayer (or tax professional on behalf of the taxpayer) must submit an application which demonstrates financial hardship. If the IRS decides that the taxpayer cannot afford to make any payments without financial hardship, then the IRS will be awarded an IRS settlement through the Offer in Compromise program.
FLAT FEE TAX SERVICE, INC. CLIENTS HAVE A
90% IRS SETTLEMENT RATE OF SUCCESS
PER THE IRS, 42% OF ALL OFFER IN COMPROMISE SUBMISSIONS ARE APPROVED
WE LIKE OUR RECORD OF SUCCESS
A taxpayer must be eligible and qualified for an Offer in Compromise. Many of our clients want to opt for an Offer in Compromise settlement because it is the only option that lowers the total value of the tax owed. It is also for this reason that this method is the most advertised settlement option by Tax Resolution companies and accounting firms.
Cost of an Offer in Compromise: Read Fees
Applying for an
Offer in Compromise
In order to submit your Offer in Compromise (OIC) application, the following forms may be required (depending on your client’s situation):
Form 656 – Offer in Compromise – This is the actual form required to make the offer. This form outlines the agreement between the taxpayer to pay a certain amount to cancel their outstanding debt with the IRS.
Form 656-A – Income Certification for Offer in Compromise Application Fee and Payment. In order to waive the application fee due to your income level, this form must be submitted to the IRS. If approved, this form will waive the Offer in Compromise processing fee and the 20% down payment.
Form 433-A (OIC)– Collection Information Statement for Wage Earners and Self-Employed Individuals. This is the form the IRS uses to determine a taxpayer’s financial hardship. The taxpayer must list all their income, expenses, assets, and liabilities. If approved for an Offer in Compromise (OIC), this form will have to be often resubmitted so the IRS can ensure that there have been no changes that would allow the taxpayer to afford to pay the tax debt. The IRS can demand that the taxpayer resubmit this form at any time to reflect their current income and expenses.
Form 433-B (OIC)– Collection Information Statement for Businesses. This is a financial statement form. It is similar to Form 433-A (OIC), but for businesses
TOP TIP FOR A SUCCESSFUL OFFER IN COMPROMISE:
HAVE AN IRS TAX ATTORNEY
Offer in Compromise
Offer in Compromise (OIC) applicants are generally put through a rigorous financial investigation before the application is approved. The IRS will consider many factors in their approval process, including whether there is any possibility that the taxpayer could pay off the whole debt in the future.
You need to be very thorough before submitting your Offer in Compromise (OIC) for your client. As you navigate the application process with your client, refer to the following checklist to be sure you’ve given your client’s case the best possible chance of success:
First and foremost, ensure that your client has no missing tax returns. The IRS will first check to see that the taxpayer is current on all their returns, and any missing returns will render an IRS debt settlement candidate ineligible for the program. In fact, as of March 2017, all IRS settlement applications will now be returned without consideration in instances where the taxpayer has not filed all required returns. In these cases, the application fee will be returned and any initial OIC (#offerincomromise) payments submitted with the Offer will be applied to the outstanding tax debt.
Next, the IRS will perform an extensive review of your client’s financial situation in comparison to the total debt owed. Before submitting your client’s application, you will want to review their finances in order to understand if they are eligible for an offer. The key is to review the Collection Financial Standards on the IRS website in comparison to your client’s current income and expenses.
Last but not least, you will want to get in contact with the IRS agent reviewing their application. As your IRS Tax Attorney, we can submit the application over the phone with the IRS and answer any questions the IRS Examiner has at the moment.
All Offer in Compromise (OIC) applications can also be submitted through the mail, but if you want to discuss any specific points with the agent, you or your IRS Tax Attorney, will need to call the agent and review the form with them as well.
If your Offer in Compromise is rejected, what are your options?
If your Offer in Compromise (OIC) is rejected, taxpayers can submit an appeal within 30 days of the date on the rejection notice. The appeal will be submitted on Form 13711, “Request for Appeal of Offer in Compromise.”
This appeal letter needs to address the issues raised in the Offer in Compromise (OIC) rejection and the taxpayer will likely have to provide additional documentation.
If accepted, the appeal will allow the taxpayer the opportunity to renegotiate their rejected offer under more acceptable terms for the IRS.
An Offer in Compromise is an important settlement option that will allow an eligible taxpayer a “fresh start” with their tax debt. If armed with the correct information, our IRS tax relief team (#IRStaxlawyer) can guide our clients through this process with a thorough review of their financial situation in order to negotiate a successful outcome with the IRS.
Want to learn more about Offer in Compromise?
Give Our IRS Tax Relief Team a Call:
1 - 866 - 747- 7435