An Offer in Compromise (OIC) is an agreement between a taxpayer and a taxing authority in which the taxing authority permits the taxpayer to pay a portion of their tax obligation rather than the entire amount.

The Internal Revenue Service (IRS) established the Offer in Compromise program for taxpayers who are unable to pay their taxes in full or for whom doing so would put them in a difficult financial situation. Taxpayers can settle their tax debt for less than the entire amount owed by appealing for an Offer in Compromise. 

The IRS will analyze the particular circumstances of the taxpayer, including their income, ability to pay, expenditures, and any assets the taxpayer owes, before deciding whether to permit them to settle their debt through an Offer in Compromise. 

Only eligible taxpayers are authorized to submit offers in compromise. By filling out the online Offer in Compromise Pre-Qualifier form, taxpayers can determine whether they are qualified for this program. 

How to apply for an Offer in Compromise

Owing money to the IRS is never a pleasant experience. In this circumstance, it is easy to feel powerless and scared, but you shouldn’t let fear and helplessness paralyze you into inaction.

Every day you delay adds another day of interest and penalties that may inflate your responsibilities and destroy your finances. In this article we discuss the Offer in Compromise program, which is one of the many available choices for tax relief.

NOTE: You are not permitted to submit an application for an offer if you or your company is embroiled in an active bankruptcy action.

Do you qualify for an Offer in Compromise?

Using the Offer in Compromise Pre-Qualifier Tool, you may verify your eligibility and create an initial draft of your proposal. 

You can submit an Offer in Compromise application if you:

  • Have made all necessary projected payments and have filed all necessary tax reports. 
  • You’re not engaged in an active bankruptcy case. 
  • Are in possession of a current-year return extension that is valid (if applying for the current year). 
  • You’re an employer who has tax deposits for the most recent quarter and past two quarters before applying.

Remember, not everyone who applies for the Offer in Compromise is eligible. In the case that you aren’t eligible, there are other options available to help you find relief. 

What to do if you don’t qualify for an Offer in Compromise

If you do not qualify for an Offer in Compromise you may be eligible for other programs such as an installment agreement. 

Installment Agreement

An Installment Agreement is a type of IRS payment plan that allows you to pay your taxes over a longer period of time. 

Taxpayers can formally agree to pay the IRS on a regular basis in the form of monthly installments by using an Installment Agreement. An IRS payment plan can last up to 72 months and often requires you to pay off all of your tax bills during that time. This agreement helps the taxpayer in making their tax payments more manageable while preventing collection calls, tax levies, and wage garnishments. Nevertheless, the IRS can continue to impose interest and a late payment fee until your debt is entirely satisfied throughout your Installment Agreement.

In such cases, the IRS will evaluate your earnings, possessions, and outgoings in order to calculate the maximum monthly payment you can make in order to catch up on your tax debt. You can use the Online Payment Agreement tool to request an installment plan. The Installment Agreement Request, Form 9465, is another option.

Choose Palm Beach Tax Relief

The Offer in Compromise is a well-known but hardly-understood provision of the tax legislation. Not all taxpayers will be eligible for the Offer in Compromise program, and even those who are may struggle to understand how the IRS operates. 

Ultimately, you should never try to fight the IRS alone. It’s crucial that you work with a tax resolution expert when you owe back taxes to avoid getting into any more trouble.  If you don’t have a professional on your side, the IRS can reject your Offer in Compromise and the amount you owe might increase as extra penalties and interest are added. 

If you have an IRS problem, contact us so we can review your situation and come up with a personal plan to get you the best results possible. Whether you qualify for an Offer in Compromise or not, our skilled team will face the IRS or state department of taxation for you and fight to get you on the best course towards relief.  

Don’t wait for the penalties to add up, call Palm Beach Tax Relief today.