offer in compromise (OIC)
Our Mission is to help save you thousands of dollars with the aid of our tax experts, programs, and resources.
offer in compromise (OIC)
The Offer in Compromise (OIC) is a program created by the Internal Revenue service (IRS) to allow qualified tax payers, with unpaid tax debt, to negotiate a tax settlement for less than what is owed, and clear the debt. There is an initial application fee of $205 to the IRS (non-refundable). You must also submit a Form 433-A (OIC) or Form 433-B (OIC) and a Form 656. The checklist is to be filled out on the form 656 and submitted and it will determine if the tax payer is qualified for (OIC). The point of the Offer in Compromise (OIC) program is to accept a compromise that is in favor of the government and the taxpayer while still promoting voluntary compliance with all future filling and payment requirements.
Qualifying for OIC
One of the three following conditions must be met in order for a tax payer to get accepted for (OIC):
- Effective Tax Administration – you don’t contest collectibility, liability, but can prove special or extenuating circumstances that a collection of the debt by the IRS would result in economic hardship.
- Doubt as to Collectibility – You can show that the full amount of the debt is uncollectible (you don’t have the funds).
- Doubt as to liability – you can show reason that the debt in questions has been assessed incorrectly.
What does all this mean? The IRS needs to be sure they are offering OIC to taxpayers who are in need it. make sure your up to date all all your tax returns, not delinquent on any tax payments for the present year, not being audited, case hasn’t been sent to the Department of Justice, not pursing bankruptcy, and you don’t have an Innocent Spouse claim open with the IRS.
Offer in Compromise is available for all taxpayers, however is mainly utilized by the elderly, disabled, or those in finical hardships.
partial payments oIC
As of April 15, 2020, an update to the Offer and Compromise (OIC) program has been made to which a tax payer is to make an initial payment of $205 accompanied with the Offer in Compromise forms. Upon receiving the fee and appropriate paperwork, the IRS has up to 24 months to decide on the acceptance of the offer. If they do not make a decision within the 24 months, you’ll be automatically accepted.
If a tax payer chooses to make partial payments (monthly) , the tax payer must include the first months payment with the initial offer submission. This is allowed under the Tax Increase Prevention Act of 2005 (TIPRA 2005). Submission of 20% of the debt would only be required for the lump sum payment. While awaiting the IRS’s decision, the tax payer will make the monthly payments if a partial payment is desired. Default on the partial payment will result in the tax payers offer to be rejected and returned. Should you be a lower income tax payer, you may be exempt from certain fees. Speak with our Safeway Tax Experts to determine whether these fees and payments apply to you.
ready for tax relief?
Click to speak with one of our tax experts. Answer some basic questions and one of our team members will reach out to you!
