Offer in Compromise – Free Tax Consultation from Former IRS 1-866-700-1040
As a former IRS agent I was an offers in compromise specialist.
Not only to work offers in compromise but as a teaching instructor.
I am a true offer in compromise or IRS tax debt settlement expert trained by the IRS.
I have worked a lifetime worth of offer cases.
As a result of my years of experience at the Internal Revenue Service, I know all the settlement formulas, the settlement procedures, and the exact structure to make this work for any taxpayer who is a true candidate for the IRS settlement program.
If you are considering filing an IRS tax debt settlement called an offer in compromise contact us today and we can offer you a free tax consultation and answer any question that you may have before you file the offer in compromise or the IRS tax debt settlement.
The IRS tax debt settlement or the offer in compromise is a true tax specialty.
There are a lot of misconceptions about the IRS tax debt settlement of OIC and it’s important for taxpayers not to be ripped off by Internet companies and firms claiming they can settle their case for pennies on a dollar.
Each case is unique in each case has its challenges. There is no such thing as a simple offer.
On our website, go to our homepage, click on IRS tools you will find the offer in compromise pre-qualifier. I advise all taxpayers who want to file an offer compromise to walk-through that pre-qualifier to make sure they are qualified offer candidate before filing.
After you walk through that form and have any questions please feel free to contact us and you will speak directly to a qualified IRS attorney, IRS lawyer, former IRS agent or instructor.
The Offer in Compromise/Tax Debt Settlements
The Internal Revenue Service Offer In Compromise Program is the basic IRS settlement tool used by taxpayers to settle their IRS debt.
IRS receives about 60,000 Offers a year. They usually take at least 9 months to work by the IRS.
Settlement program for IRS has a 25% -30% success rate for all those who file offers in compromise. most offers that are accepted by the IRS.
You should know from the start that not all taxpayers fit into the IRS settlement program. Many taxpayers hear about the program thinking that IRS accepts offers in all cases.
The offer in compromise program is for those who have very few assets and have a limited amount of income. There are strict standards for the offer in compromise or IRS tax debt settlement program.
You should not engage any tax firm until they let you know that you are a true settlement candidate.
Many internet tax firms rip thousands and thousands of taxpayers off by telling them ” we can settle for pennies on a dollar. ” If you are going to hire any firm to process your IRS tax debt settlement or your offered compromise I suggest you hire a professional tax firm that has IRS tax attorneys, IRS tax lawyers, certified public accountants, or former IRS agents and managers.
Make sure you are speaking to a tax attorney, certified public accountant, and enrolled agent or a former IRS agent. With most Internet firms they often have sales people try to convince you into an IRS settlement program. Be very cautious this does not happen to you because you can lose your upfront money.
We have over 60 years of direct working knowledge and experience with the Internal Revenue Service and the local, district, and regional tax offices of the Internal Revenue Service.
We will review your case for free and let you know whether you are a qualified settlement program candidate for your back taxes. Hear the truth from fresh start tax today.
What is a IRS Tax Debt Settlement
An offer in compromise or IRS tax debt settlement program is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed.
If the liabilities can be fully paid through an installment agreement or other means, the taxpayer will in most cases not be eligible for an OIC. check the IRS pre-qualifier before filing.
Eligibility for IRS Tax Debt Settlements
In order to be eligible for an OIC, the taxpayer must have filed all tax returns, made all required estimated tax payments for the current year, and made all required federal tax deposits for the current quarter if the taxpayer is a business owner with employees.
Reasonable Collection Potential
In most cases, 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 RCP includes the value that can be realized from the taxpayer’s assets, such as real property, automobiles, bank accounts, and other property. In addition to property, the RCP also includes anticipated future income, less certain amounts allowed for basic living expenses.
IRS may accept an Tax Debt Settlement or Offer in Compromise based on three grounds.
1. Acceptance is permitted if there is doubt as to liability. This ground is only met when genuine doubt exists under applicable law that the IRS has correctly determined the amount owed.
2. Acceptance is permitted if there is doubt that the amount owed is fully collectible. This means that doubt as to collectibility exists in any case where the taxpayer’s assets and income are less than the full amount of the tax liability.
3. 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 tax is legally owed and 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.
Submission of the IRS Offer in Compromise/IRS Tax Debt Settlement
When submitting an OIC based on doubt as to collectibility or based on effective tax administration taxpayers must use the most current version of Form 656 (PDF), Offer in Compromise, and must also submit Form 433-A (PDF), Collection Information Statement for Wage Earners and Self-Employed Individuals, and/or Form 433-B (PDF), Collection Information Statement for Businesses.
You can find these forms on our website.
A taxpayer submitting an OIC based on doubt as to liability must file a Form 656-L (PDF), Offer in Compromise (Doubt as to Liability), instead of Form 656 and Form 433-A and/or Form 433-B.
Application fee for the IRS Tax Debt Settlement program
A taxpayer must submit a $150 application fee with the Form 656. Do not combine this fee with any other tax payments.
There are, however, two exceptions to this requirement.
1. No application fee is required if the OIC is based on doubt as to liability.
2. The fee is not required if the taxpayer is an individual (not a corporation, partnership, or other entity) who qualifies for the low-income exception.
This exception applies if the taxpayer’s total monthly income falls at or below 250 percent of the poverty guidelines published by the Department of Health and Human Services. Section 4 of Form 656 contains the Low Income Certification guidelines to assist taxpayers in determining whether they qualify for the low-income exception.
A taxpayer who claims the low-income exception must complete section 4 of Form 656.
The lump sum payment settlement for the Tax Debt Settlement
Taxpayers may choose to pay the offer amount in a lump sum or in installment payments. A “lump sum offer” is defined as an offer payable in 5 or fewer installments and within 24 months after the offer is accepted.
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 Settlement
The offer is called a “periodic payment offer” under the tax law if it is payable in 6 or more monthly installments and within 24 months after the offer is accepted.
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.
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 where 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.
For doubt as to collectibility and effective tax administration OICs, the terms and conditions include a requirement that the taxpayer timely file all tax returns and timely pay all taxes for 5 years from the date of acceptance of the OIC.
IRS Tax Debt Settlement in Default
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. Additionally, any refunds due within the calendar year in which the offer is accepted will be applied to the tax debt.
Rejections of the IRS Settlement for Back Taxes
If the IRS rejects an OIC, then the taxpayer will be notified by mail. The letter will explain the reason that the IRS rejected the offer and will provide detailed instructions on how the taxpayer may appeal the decision to the IRS Office of Appeals.
The appeal must be made within 30 days from the date of the letter.
In some cases, an OIC is returned to the taxpayer, rather than rejected, because the taxpayer has not submitted necessary information, has filed for bankruptcy, has failed to include a required application fee or nonrefundable payment with the offer, or has failed to file tax returns or pay current tax liabilities while the offer is under consideration.
A return is different from a rejection because there is no right to appeal the IRS’s decision to return the offer.
You can refile your IRS Settlement on Back Taxes if it is not approved
Remember you can file as many offers in compromise as you want.
Taxpayers are not restricted whatsoever. If your first offer in compromise is rejected learn from your mistakes and resubmit another offer correcting the issues in which IRS had problems with.
IRS Tax Debt Settlements – Free Answers to Questions – IRS Tax Attorneys, Lawyers, Former IRS
