IRS TAX DEBT RELIEF

Tax Debt Relief

IRS OFFER IN COMPROMISE

BTS.TAX services provides professional expertise in managing past due tax debt which can lead to accumulating interest payments, late fees/penalties, and leans against personal properties. Here at BTS.TAX we keep things convenient by supporting online consultations and submissions so you can keep your busy day moving forward.

What is an IRS Offer in Compromise?

 An Offer in Compromise (OIC) is a tax settlement option offered by the Internal Revenue Service (IRS) for taxpayers who are unable to pay their tax debt in full. It allows taxpayers to settle their tax debt for less than the full amount owed, providing they meet certain criteria and have no other options available to pay their debt.

The IRS considers an Offer in Compromise as a last resort option, and they will only accept an offer if it is in the best interests of both the taxpayer and the government. To determine whether a taxpayer qualifies for an OIC, the IRS will consider several factors, including the taxpayer's income, expenses, and assets.

To apply for an Offer in Compromise, taxpayers must complete and submit Form 656, along with a non-refundable application fee of $205 (as of 2021). The application must also include a detailed explanation of the taxpayer's financial situation, along with supporting documentation.

There are three types of Offer in Compromise:

1. Doubt as to Liability: This offer is available when there is a genuine dispute about the amount of tax owed.
2. Doubt as to Collectability: This offer is available when the taxpayer's assets and income are not enough to pay the full amount of tax owed.
3. Effective Tax Administration: This offer is available when the taxpayer is not disputing the amount of tax owed, but paying the tax would cause an undue hardship.

The IRS may also consider a taxpayer's offer based on "special circumstances," such as a natural disaster, serious illness, or other circumstances beyond the taxpayer's control.

It's important to note that submitting an Offer in Compromise does not automatically put a stop to collection actions by the IRS. Taxpayers must continue to make timely payments on their tax debt until the offer is accepted and the tax debt is paid in full.

If you are considering submitting an Offer in Compromise to the IRS, it's recommended that you consult with a qualified tax professional to help guide you through the process and determine whether it's the right option for you.

Offer in Compromise Process

The IRS Offer in Compromise (OIC) is a program that allows eligible taxpayers to settle their tax debt for less than the full amount owed. It is a valuable option for individuals who are genuinely unable to pay their tax debt in full and can provide financial relief from overwhelming tax obligations. The process of the IRS Offer in Compromise involves several steps:

• Eligibility Determination:
• The first step is to determine if you qualify for the OIC program. The IRS assesses various factors, including your income, expenses, assets, and future earning potential. You must be current with all tax filings and not in an open bankruptcy proceeding to be eligible for consideration.

• Submission of Offer Package:
• If you meet the eligibility criteria, you can submit an Offer in Compromise package to the IRS. The package includes Form 656, Offer in Compromise, along with Form 433-A (for individuals) or Form 433-B (for businesses) to detail your financial situation. You will also need to include a non-refundable application fee and initial payment, which is based on your proposed offer amount.

• IRS Review and Evaluation:
• After receiving your Offer in Compromise package, the IRS will review your financial information thoroughly. They will assess your ability to pay the full tax debt within a reasonable period, considering your assets, income, expenses, and future earning potential. During this review, the IRS may request additional information or clarification.

• Temporary Suspension of Collection Activities:
• Once your OIC is under consideration, the IRS will generally suspend any active collection efforts against you. This includes levies, liens, and wage garnishments, providing some financial relief during the evaluation process.

• Potential Negotiations:
• In some cases, the IRS may engage in negotiations to reach an acceptable offer amount. They may propose a higher amount based on their assessment of your ability to pay. You have the opportunity to discuss and negotiate the proposed offer with the IRS.

• Decision and Acceptance:
• If the IRS determines that your offer is fair and represents the most they can expect to collect within a reasonable time, they may accept your OIC. Once accepted, you must comply with all terms and conditions, which typically include remaining current with tax filings and making agreed-upon payments.

• Rejection or Appeal:
• If the IRS rejects your offer, you have the right to appeal the decision. Appeals should be filed within the specified timeframe and address the reasons for the rejection with supporting documentation.

Navigating the IRS Offer in Compromise process can be complex, and it's essential to seek guidance from tax professionals experienced in negotiating with the IRS. A tax professional can help ensure that your offer package is accurately prepared, increasing the likelihood of success and providing you with the best possible outcome for resolving your tax debt.



What You Will Need

Documents and information needed to process and Offer In Compromise.  Additional information may be needed on a case by case bases. Talk to one of our specialist for more details.

1. Credit card statements
2. Bank statements
3. Statements related to car loans
4. Statements from any other personal loans
5. Investment statements
6. Retirement account statements
7. Health care bills
8. Child care bills and receipts
9. Proof of mortgage payments
10. Documentation about housing expenses (leases, rental records, etc.)
11. Transportation costs
12. Proof of other expenses (groceries, utility bills, etc.)
13. List of your assets and their values
14. Appraisals of assets as necessary
15. Copies of the required tax returns for the years related to the taxes owed

Ensuring that all relevant documentation is provided will help streamline the tax preparation process. If you have any questions or need clarification, please don't hesitate to reach out.