Offer in Compromise
In the world of taxes, there’s a glimmer of hope for those facing insurmountable tax debt – the IRS Offer in Compromise (OIC) program. We will guide you through the intricacies of the IRS OIC, who qualifies, how to apply, and what to do if your offer is rejected. At TaxHelpUSA, we’re here to assist you every step of the way.
What Is an IRS Offer in Compromise?
An IRS Offer in Compromise is a lifeline for taxpayers burdened with overwhelming tax debt. It’s essentially a legal agreement between you and the IRS that allows you to settle your tax debt for less than the full amount owed. This program aims to provide financial relief to those who genuinely cannot pay their tax debt in full.
Who Is Eligible?
To be eligible for an IRS Offer in Compromise, you must meet the following criteria:
- Tax Compliance: You have filed all necessary tax returns and fulfilled all required estimated payments.
- Bankruptcy Status: You are not currently involved in an active bankruptcy proceeding.
- Current Year Extension: If you are applying for the current year, you possess a valid extension for that year’s return.
- Employer Requirements: If you are an employer, you have consistently made tax deposits for the current year and the preceding two quarters before initiating your application.
Does the IRS Calculate Whether It Will Accept Your OIC?
Assuming you’ve successfully met the pre-qualifications, you might be wondering how the IRS determines whether your Offer in Compromise (OIC) will be accepted. The process begins with a thorough examination of your financial details, ultimately leading to the calculation of your Reasonable Collection Potential (RCP). In simpler terms, the RCP represents the maximum amount the IRS can reasonably expect to collect from you, encompassing both immediate and future income sources.
The IRS conducts this evaluation by scrutinizing various aspects of your financial situation, including:
- Bank Accounts: They assess the balances in your bank accounts.
- Real Estate: The value of any real estate holdings you may possess is taken into account.
- Motor Vehicles: The IRS evaluates the worth of your vehicles.
- Current Income: Your current income, including wages and other sources of revenue, is considered.
- Future Income: Projections about your future income are factored into the equation.
How to Apply
Applying for an IRS OIC can be a complex process. You’ll need to complete and submit Form 656, along with a $205 application fee. You’ll also need to provide detailed financial information. TaxHelpUSA offers a free consultation to help you navigate the application process effectively.
Other Things to Keep in Mind
- Application Fee: Most applicants must pay a nonrefundable $205 fee, but low-income taxpayers may qualify for a waiver.
- Initial Payment: An initial payment is required, also nonrefundable. It’s either 20% of your proposed payment (for five or fewer installments) or your first monthly installment (for six or more installments).
- Collection Suspension: Once you apply, the IRS halts collection activities. Tax liens may be in place until your offer is accepted and fulfilled.
- Refund Changes: For OICs accepted after Nov. 1, 2021, the IRS no longer recoups refunds for the year of acceptance, except for refunds from amended returns.
- Offset Bypass Refund (OBR): If awaiting an OIC decision, you may seek an OBR to prevent refund garnishment, but you must prove economic hardship and may not receive the full refund.
- Public Information: Some OIC details are public, including the taxpayer’s name, location, liability amount, and offer terms.
- Appeal Option: If your offer is rejected, you have 30 days to appeal using the IRS’s online resources.
Potential Reasons for IRS OIC Rejection
While meeting certain criteria, such as being out of bankruptcy and fulfilling tax obligations, is crucial, it’s essential to understand that your Offer in Compromise (OIC) application might still face denial. Possible reasons for rejection encompass:
- Court-Ordered Debt: If the tax debt is court-ordered, it may not be eligible for an OIC.
- Incomplete Information: Ensure all necessary details are included in your application to avoid rejection.
- Lack of Tax Bill: If you didn’t receive a tax bill for the included debt in your offer amount, it could lead to rejection.
- Involvement of the Justice Department: If your case has already been referred to the Justice Department by the IRS, your OIC might be declined.
- Application Fee Nonpayment: Failure to pay the nonrefundable $205 application fee can result in rejection. This fee is waived for low-income individuals, determined by AGI, family size, and residence criteria outlined on Form 656, Section 1.
What to Do If Your Offer Is Rejected?
If your offer is rejected, don’t lose hope. You have the right to appeal the decision. TaxHelpUSA has a proven track record of successful appeals. We’ll work diligently to present a strong case on your behalf.
Why Choose TaxHelpUSA?
Here’s why TaxHelpUSA stands out:
- Expert Team: Our professionals are highly experienced in IRS OIC negotiations.
- Free Consultation: We offer a complimentary consultation to assess your eligibility and options.
- Low Prices: Our services are affordable, providing access to expert assistance without breaking the bank.
- Client Feedback: Real client feedback attests to our effectiveness in resolving tax issues.
- Confidentiality: We prioritize the confidentiality of your financial information.
Get IRS Offer in Compromise Help Now!
Navigating the IRS Offer in Compromise program can be challenging, but with TaxHelpUSA, you’re not alone. We’re here to guide you through the process, from application to resolution. If you’re facing tax debt, an OIC might be your path to financial freedom. Contact us today to learn more about how TaxHelpUSA can help you find relief and regain control of your financial future.