Offer in Compromise: IRS Program Qualifications & FAQs
Eligibility requirements, FAQs, and how to apply for an Offer In Compromise settlement.
Understanding the Offer in Compromise Program and Common FAQs
At Tax Law Advocates, we understand the struggles and stress that come with tax debt issues. For many, the situation can feel overwhelming, leaving you feeling helpless and unsure of what to do. Fortunately, there is a potential solution: the Offer in Compromise program.
What is an Offer in Compromise?
The Offer in Compromise (OIC) program is a tax debt settlement program that allows eligible taxpayers to settle their tax debt for less than the full amount owed. In other words, the IRS agrees to accept a lower amount to settle the debt. This program is designed for taxpayers who are unable to pay their full tax debt or for those who would suffer financial hardship if they did so.
How does it work?
To qualify for an Offer in Compromise, taxpayers must first meet certain eligibility requirements. These include having filed all required tax returns, making all required estimated tax payments for the current year, and not being involved in an open bankruptcy proceeding.
Once eligibility has been established, taxpayers must submit a detailed financial statement, along with documentation to support their claim that they are unable to pay the full amount owed. The IRS will review the financial statement and documentation to determine whether the taxpayer is eligible for the program.
If the IRS accepts the Offer in Compromise, the taxpayer will be required to pay the agreed-upon amount within a certain timeframe. Once the payment is made, the taxpayer’s tax debt will be considered settled in full.
Offer in Compromise: Program Qualifications
The Offer in Compromise program can be a complex and confusing process. At Tax Law Advocates, we can help guide you through each step of the process and ensure that your application is complete and accurate. Here are some frequently asked questions about the program:
Who is eligible for the Offer in Compromise program?
- To be eligible for the program, taxpayers must have filed all required tax returns, made all required estimated tax payments for the current year, and not be involved in an open bankruptcy proceeding.
How much will I have to pay if my Offer in Compromise is accepted?
- The amount you will have to pay will depend on several factors, including your ability to pay, your income and expenses, and the amount of your tax debt.
How long does the process take?
- The process can take several months to a year, depending on the complexity of your case and the backlog of the IRS.
Benefits of the Offer in Compromise program
The Offer in Compromise program offers several benefits for eligible taxpayers. These include:
- A reduced tax debt: The program allows taxpayers to settle their tax debt for less than the full amount owed, providing financial relief for those who are struggling to make ends meet.
- Relief from financial hardship: For some taxpayers, paying the full amount owed would cause significant financial hardship. The program allows them to settle their tax debt for a more manageable amount.
- Avoidance of IRS enforcement actions: By participating in the Offer in Compromise program, taxpayers can avoid aggressive enforcement actions by the IRS, such as wage garnishment or bank levies.
Offer in Compromise vs Bankruptcy
Deciding between an Offer in Compromise and bankruptcy can be a difficult decision. At Tax Law Advocates, we can help you understand the pros and cons of each option and determine which is best for your unique situation.
Understanding IRS Fees for Offer in Compromise
The IRS charges a fee for submitting an Offer in Compromise application. At Tax Law Advocates, we can help you understand the fee structure and ensure that you are not overcharged.
What is the Fresh Start Program?
The Fresh Start Program is a series of initiatives launched by the IRS to help taxpayers who are struggling to pay their taxes. The program includes several different initiatives, including the Offer in Compromise program, installment agreements, and currently not collectible status.
At Tax Law Advocates, we can help you understand how the program works and whether you may be eligible for one of the initiatives. We can also help you navigate the application process and ensure that you get the relief you need.
Understanding Tax Liens
A tax lien is a legal claim the government has against your property if you fail to pay your tax debt. Tax liens can have a significant impact on your credit score and can make it difficult to obtain loans or credit in the future.
At Tax Law Advocates, we can help you understand the impact of a tax lien and how to resolve it. We can also help you negotiate with the IRS to have the lien released or withdrawn.
Get Help with Your Offer in Compromise
Don’t let tax debt issues consume your time and energy. Contact Tax Law Advocates today at 855-612-7777 to schedule a consultation and get on the path to resolution and peace of mind. Our experienced tax professionals are here to help you navigate the Offer in Compromise program and find the best solution for your unique situation.
Why choose Tax Law Advocates for your Offer in Compromise?
At Tax Law Advocates, we have a team of experienced tax professionals, including federally licensed enrolled agents, tax attorneys, and accountants, who have been helping taxpayers resolve tax debt issues for decades. We understand the complexities of the tax code and have the knowledge and expertise to navigate the Offer in Compromise program on your behalf.
Our step-by-step consultation process allows us to fully understand your unique situation and determine the best course of action to resolve your tax debt issues. We are committed to providing our clients with honest, quality service, and have maintained an A+ accreditation with the Better Business Bureau and an AAA rating with the Business Consumer Alliance.
Offer in Compromise FAQs
Q: What is the success rate of Offer in Compromise?
A: The success rate of Offer in Compromise varies from case to case. However, the IRS typically approves less than half of the OIC applications it receives.
Q: What are the eligibility requirements for Offer in Compromise?
A: To be eligible for Offer in Compromise, taxpayers must meet the following requirements:
- Must have filed all required tax returns
- Must have made all required estimated tax payments for the current year
- Must not be involved in an open bankruptcy proceeding
Q: Can I apply for Offer in Compromise if I am currently making payments under an installment agreement?
A: Yes, you can apply for Offer in Compromise if you are currently making payments under an installment agreement. However, you must continue making the installment payments until your Offer in Compromise is accepted.
Q: Can I apply for Offer in Compromise if I have a tax lien?
A: Yes, you can apply for Offer in Compromise if you have a tax lien. However, the tax lien will remain in place until your Offer in Compromise is accepted and the tax debt is paid in full.
Q: Can I appeal a rejection of my Offer in Compromise?
A: Yes, you can appeal a rejection of your Offer in Compromise. You must file the appeal within 30 days of receiving the rejection letter.
Q: How much does it cost to apply for Offer in Compromise?
A: The cost to apply for Offer in Compromise is $205. However, the fee may be waived for taxpayers who meet certain income requirements.
Q: How long does it take to process an Offer in Compromise?
A: The processing time for Offer in Compromise varies depending on the complexity of your case and the backlog of the IRS. It can take several months to a year for the IRS to process your application.
Q: Can I negotiate with the IRS on the amount of my Offer in Compromise?
A: Yes, you can negotiate with the IRS on the amount of your Offer in Compromise. However, the IRS will only accept an Offer in Compromise if it is the most they can expect to collect from you within a reasonable timeframe.
Q: Will an Offer in Compromise affect my credit score?
A: No, an Offer in Compromise will not directly affect your credit score. However, if you have a tax lien, it can have a significant impact on your credit score.
Q: Can I make payments on my Offer in Compromise?
A: Yes, you can make payments on your Offer in Compromise. However, the IRS requires that you pay the agreed-upon amount within a certain timeframe.
Q: What happens if I don’t pay the agreed-upon amount on my Offer in Compromise?
A: If you don’t pay the agreed-upon amount on your Offer in Compromise, the IRS can revoke the agreement and pursue collection actions against you.
