Former IRS agent and Teaching Instructor
Make sure your offer get pre-qualified before your file with the IRS. Our office will pre-qualify your offer for no cost.
Do not get ripped off.
Much is written about the IRS Offer in Compromise but the truth is there are few experts in the area. Solid Tax problem help is hard to find so check BBB rating and the expertise of the tax professional your chose.
Offers in Compromises’ are submitted by the thousands and thousands or person and tax firms however few persons have the inside knowledge about the Settlement process of IRS.
I can make this statement because I have been working Offers in Compromise since 1976. As a Former IRS Agent, not only did I work Offers in Compromise I also was an instructor with IRS who taught the Settlement Program to new IRS agents.
What is an Offer in Compromise or a Tax Debt Settlement
There are different types of Offers, the offer that applies to most taxpayers wanting to settle their case is a Offer as to Collectibility.
About 53,000 Offers are filed each year and the IRS accepts around 27% . It should also be known that of the 27% most of those offers accepted are turned in by tax professionals.
An offer in compromise doubt as to collectibility allows you to settle your tax debt for less than the full amount you owe. This is where the phase” pennies on a dollar ” derives itself from.
OIC may be a legitimate option if you cannot pay your full tax liability or doing so creates a financial hardship.
Make sure you check with a competent tax professional and have your case pre-qualified for an Offer in Compromise before you file. There are many companies that will rip you off.
The Offer Process.
IRS will consider your unique set of facts and circumstances:
a. Ability to pay;
b. Income;
c. Expenses and
d. Asset equity.
IRS generally approves an offer in compromise when the amount offered represents the most the IRS can expect to collect within a reasonable period of time. The normal time period to settle is within a 6-7 month window.
The Settlement comes down to two things:
The Settlement of your taxes comes down to two things, assets and income. The reality is that the IRS in not concerned about any of your liabilities, they are only concerned about assets they have a right to take are seize.
The basic settlement formula:
1.IRS wants to value of all your assets, there is a distrait value to most assets and there is a specific form we go over with our clients with to determine the exact value IRS will seek. IRS excepts distrait values so you want to be sure you use the lowest values allowed by law.
2. IRS will then turn to your income and your expenses. IRS will compare your income with the necessary allowed living expenses in the area in which you are living. The IRS will subtract your expense from your income. If there is a surplus they will multiply that number by 12.
Both the asset value and the income expense ratios are added together and becomes your offer to the IRS.
Select a payment option
Your initial payment will vary based on your offer and the payment option you choose:
a.Lump Sum Cash.
Submit an initial payment of 20 percent of the total offer amount with your application. Wait for written acceptance, then pay the remaining balance of the offer in five or fewer payments.
b.Periodic Payment.
Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.
If you meet the Low Income Certification guidelines.
You do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer. See your IRS application package for details or just ask your tax professional.
Understand the OIC process
- While your offer is being evaluated: Your non-refundable payments and fees will be applied to the tax liability (you may designate payments to a specific tax year and tax debt);
- A Notice of Federal Tax Lien may be filed; you need to check with your tax professional,
- Other collection activities may be suspended,
- The legal assessment and collection period is extended,
- Make all required payments associated with your offer,
- You are not required to make payments on an existing installment agreement or payment agreements, and
- Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date.
Call us today to get a no cost evaluation for a tax settlement. 1-866-700-1040.
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