Based on the current economic downturn, many taxpayers find themselves unable to pay their tax bill. That’s why many request an offer in compromise from the IRS. But an offer in compromise is not for everybody. Many people believe that if they currently do not have the funds on hand then the IRS will automatically [...]
The IRS struggles every year to collect unpaid taxes. Interest and penalties accrue on all tax debts until paid and often penalties and interest can equal two or three times the original tax amount. However, the IRS and Congress soon realized that getting something was better than nothing and that it made sense to forgive [...]
The IRS has many programs available to taxpayers who have unpaid tax bills. One of the most popular programs is called the IRS Offer in Compromise. The IRS receives a substantial number of OICs each year, but has only limited processing capabilities in Memphis, TN and Brookhaven, NY (the two locations in charge of processing [...]
A tax offer in compromise is merely an agreement between the IRS and a taxpayer whereby the taxpayer’s tax debt is settled for an amount that is less than the full balance that is owed. Generally, the IRS will not accept an offer in compromise if it feels that the tax liability can be paid [...]
Often there are circumstances that arise when a taxpayer has accumulated a substantial tax liability that clearly exceeds any ability to pay in a lump sum. In this situation, the taxpayer should consider hiring an Offer in Compromise attorney to handle the negotiations with the IRS.
The IRS applies the same collection standards utilized in installment [...]
In most circumstances, the Deferred Periodic Payment Offer in Compromise is the most expensive and, therefore, worst option for a taxpayer. Net monthly income is calculated as far as the Statute of Limitations on the most recently accrued tax liability extends, which can mean calculating up to ten years of collection potential (this time period [...]
Probably the most important component of submitting a tax offer in compromise is section 9 of Form 433-A, otherwise referred to as the Monthly Income and Expense Analysis. It provides the basis by which the filer’s monthly income is weighed against their expenses, resulting in what the IRS calls the filer’s reasonable collection potential (RCP).
To [...]
Before filing Offers in Compromise, it is important to consider the different payment methods available. Although there are a number of different payment methods for fulfilling an Offer in Compromise, two stand out as the most frequently implemented strategies: the Cash and the Short Term Deferred Offers.
The Lump Sum variety is an Offer of a [...]
On the fifteenth of July, 2006, the IRS changed its policies regarding the Offer in Compromise. Firstly, the amount of time for the assessment has changed, and the IRS now has two years after it judges that the request has met all requirements to process it. If the two-year time limit expires, then the Offer [...]
For a taxpayer, an Offer in Compromise represents a great opportunity to resolve tax debt and move forward. For the IRS, accepting an Offer in Compromise represents the same opportunity, but it comes with the expectation that taxpayers will begin to pay their taxes on time. The following are a few helpful tips and words [...]