IRS Offer in Compromise – Tax Debt Negotiation -Tax Attorneys, Former IRS – Essex, Morris, Bergen, Passaic, Union – New Jersey

As Former IRS agents we taught the Offer in Compromise at the Internal Revenue Service. 1-866-700-1040.

We know all the procedures and policies governing IRS tax settlement called the Offer in Compromise.

We will qualify your case for a no cost consult before recommending a plan of course of action. the OIC is a very detailed procure and required professional shill for acceptance.

The IRS accepts 30 % of all offers turned in and 90% of those are submitted by professional tax firms.

We are a local professional tax firm that specialize in IRS Offers  in Compromise. 1-866-700-1040.

We have over 205 years of professional tax expereince and over 60 years of direct IRS work experience.

We have over 60 years of direct work expereince with the IRS in the local, district and regional offices of the IRS.

The IRS Offer in Compromise, Tax Debt Negotiation

An offer in compromise  is a legally binding agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed.

The IRS will not accept an OIC unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (the RCP). The RCP is how the IRS measures the taxpayer’s ability to pay. The formula is based on income plus assets.

The RCP includes the value that can be realized from  all of the taxpayers assets, such as real property, automobiles, bank accounts, IRA’s and pension plans and other property. In addition to property, the RCP also includes anticipated future income, less certain amounts allowed for basic living expenses.

The IRS may accept an OIC based on three basic  grounds.

1. The acceptance is permitted if there is doubt as to liability.

This ground is only met when genuine doubt exists that the IRS has correctly determined the amount owed.

2. The acceptance is permitted if there is doubt that the amount owed is collectible.

This means that doubt exists in any case where the taxpayer’s assets and income are less than the full amount of the tax liability.

3. The acceptance is permitted based on effective tax administration.

An offer may be accepted based on effective tax administration when there is no doubt that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances. Many times rare circumstances such as medical issues may arise that will cause the IRS to take a second look.

Taxpayers may choose to pay the offer amount in a lump sum or in installment payments.

Lump Sum Payment

A lump sum offer is defined as an offer payable in 5 or fewer installments.

If a taxpayer submits a lump sum offer, the taxpayer must include with the Form 656 a nonrefundable payment equal to 20 percent of the offer amount.

This payment is required in addition to the $150 application fee.

The 20 percent amount is called nonrefundable because it cannot be returned to the taxpayer even if the offer is rejected or returned to the taxpayer without acceptance. The 20 percent amount will be applied to the taxpayer’s tax liability.

The taxpayer has a right to specify the particular tax liability to which the IRS will apply the 20 percent amount.

Periodic Payment Offer

The offer is called a “periodic payment offer” under the tax law if it is payable in 6 or more installments. When submitting a periodic payment offer, the taxpayer must include the first proposed installment payment along with the Form 656.

This payment is required in addition to the $150 application fee.

This amount is nonrefundable, just like the 20 percent payment required for a lump sum offer. Also, while the IRS is evaluating a periodic payment offer, the taxpayer must continue to make the installment payments provided for under the terms of the offer. These amounts are also nonrefundable.

These amounts are applied to the tax liabilities and the taxpayer has a right to specify the particular tax liabilities to which the periodic payments will be applied.

Statutory Period of Time

Ordinarily, the statutory time within which the IRS may engage in collection activities is suspended during the period that the OIC is under consideration and is further suspended if the OIC is rejected by the IRS and the taxpayer appeals the rejection to the IRS Office of Appeals within 30 days from the date of the notice of rejection.

If the IRS accepts the taxpayer’s offer, the IRS expects that the taxpayer will have no further delinquencies and will fully comply with the tax laws. If the taxpayer does not abide by all the terms and conditions of the OIC, the IRS may determine that the OIC is in default.

To avoid a default, the taxpayer must timely file all tax returns and timely pay all taxes for 5 years or until the offered amount is paid in full, whichever period is longer

When an OIC is declared to be in default, the agreement is no longer in effect and the IRS may then collect the amounts originally owed, plus interest and penalties.

Call us to see if you qualify for an offer. 1-866-700-1040

IRS Offer in Compromise – Tax Debt Negotiation -Tax Attorneys, Former IRS – Essex, Morris, Bergen, Passaic, Union – New Jersey