IRS Offer in Compromise Process

An IRS Offer in Compromise is a program for settling back IRS tax debts for less than what is owed. It is ideal for someone who has had a consistent stream of income over a long period of time, but lost that stream of income and has no promise of future employment. While the IRS Offer in Compromise is the IRS’s most popular program, it requires an intensive review, and can turn into a lengthy process, ranging from four months to two years.

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Is an IRS Offer in Compromise Right for You?

Taxpayers who have fallen on hard times but are looking to resolve their Internal Revenue Service (IRS) tax debt have the option of filing for an Offer in Compromise, a settlement program in which the IRS will settle for an amount less than what the taxpayer owes. How do you know if an IRS Offer In Compromise it’s the right option for you? Our tax law expert provides some answers about IRS compromise.

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After the IRS accepts my offer in compromise (OIC), what are my obligations?

Once an offer in compromise is accepted and you are paying the compromised amount off in installments, it is more important than ever that you maintain compliance with your filing requirements, estimated tax payments, and any and all payments for the offer in compromise. Failure to do so even once may result in your offer in compromise being rejected entirely and you will owe the amount you did before minus the payments you already made.

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How to Qualify for an IRS Offer in Compromise (OIC)

Offers are not guaranteed to be accepted at the time of applying and interest and debt collection attempts continue during the review process. It is very important to meet all of the requirements when submitting the application. The two different types of offer in compromise are streamlined and standard. Both have specific legal grounds to qualify.

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What are the payment options in an IRS Offer in Compromise?

An IRS offer in compromise provides debt relief for people who are either unable to pay due to insufficient assets or for whom payment would be unfair and inequitable. As part of the offer in compromise, the IRS offers two options for repaying your offer amount. The first option requires payments of set amounts to be completed within five months from the date of submission. The second option requires monthly installment payments of your set amount until the debt is paid in full.

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When does it make sense to hire a tax attorney to negotiate an IRS Offer in Compromise?

There are some occasions where an attorney is not only useful, but invaluable in assisting you with your IRS offer in compromise negotiation. An attorney can aid in reinforcing your current financial situation to the IRS and typically has more effective lines of communication with IRS agents. The attorney can clarify that all communications go directly through their office and can handle the paperwork and formalities for you, removing much of the stress and work so that you can focus on getting well. If your offer in compromise is rejected, you have the right to appeal to the tax court. As with any court of appeals, this appeal must be handled by an attorney.

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