IRS has many programs available to tax payers with unpaid tax bills. Offer in Compromise (OIC) is probably the most popular and misunderstood solution to tax liabilities.
Every year, IRS receives a substantial numbers of OICs but has only limited processing capabilities. An OIC is an agreement between the IRS and taxpayer that allows the taxpayer’s delinquent tax debt to be compromised for less than the amount owed. The offered dollar amount is based on the taxpayer’s net worth plus their future income potential.
To process the offer, taxpayers must paid $150 application fee, file all back tax returns, not involve in an on-going audit and bankruptcy proceeding.
The Revenue Officer will look at the individual’s income as well as future job prospects of the taxpayer including his education, profession, age, experience, and past income. The IRS will determine a present value based on the individual’s ability to pay. The system decides how much tax payer can pay per month and then multiply it by 48 months to determine its present value. If the individual requests a short term deferred offer, the IRS will use 60 months to determine the present value unless there is less than five years on the statute of limitations.
Keep in mind some IRS districts are stricter in their acceptance of offers in compromise than other districts. The offer in compromise works best for an individual who can prove hardship and has few assets and not much disposable income.
Optima Tax Relief has attorneys and accountants to help tax payers in OIC stages. For example, during the verification stage, IRS examines all of the financial information that was provided from the taxpayer, Optima Tax Relief examines, prepare and analyze financial claims (income, property ownership, etc.) and if IRS needs additional information Optima Tax Relief also assist with Offer Verification Letter given by IRS.
It is imperative to respond to IRS in a professional timely manner. Tax payers has few weeks to act, and if the response is not timely, the IRS can dismiss the offer.
The IRS then assesses the taxpayer’s potential for collection. As a result, the Tax Payer has the right to accept the IRS offer in compromise as it was submitted originally and with the rights to dispute the IRS finding.
Contact Optima Tax Relief to learn about three types of compromise and Tax Relief and how a professional can negotiate with IRS on your behalf. Optima Tax Relief does not guarantee your compromises be granted but exceptional experts will prove your case and how economic hardship qualifies you for an Effective Tax Administration (ETA), Doubt as to Liability (DATL), or Doubt as to Collectible (DATC) offer.
Offer in Compromise, Tax Relief Solutions