IRS Offer In Compromise, The 5 Little Known Facts You Must Know Before You Make A Deal With The IRS!

The IRS offer in compromise program or IRS OIC is not new. The OIC provides a systematic and rational way for you and the IRS to agree on a fair, equitable and realistic way for you to end your tax difficulties.

There are only two circumstances when an IRS offer in compromise will be considered.

• When the taxpayer is unable to pay the full tax liability and it is doubtful that the tax, penalty and interest can be fully collected within the foreseeable future through the collection process (doubt of collectible cases).
• Where there is doubt about the taxpayer’s tax liability (doubt of liability cases). A case may involve both doubt of collectivity and liability.

Many OlCs come from chronic tax delinquents and scofflaws, and irs offer in compromise are not intended to encourage people to disregard the tax laws.

Your IRS offer in compromise also commits you to:

• Comply with all terms and conditions of the agreement.
• Give the IRS your future tax refunds for 5 years to cover those unpaid taxes not compromised.
• Comply with all IRS requirements (timely tax filings and payments) for five years.

The IRS takes OIC compliance seriously. The aim of the OIC program is to help troubled taxpayers get back on a straight track with the IRS - if they can stay on a straight track This explains why the IRS quickly revokes OICs when the taxpayer continues to violate the tax laws.

For your irs offer in compromise to be considered, all tax returns due from you must be filed. You will want your delinquent tax returns filed so you can include all outstanding tax obligations in your OIC. This includes not only income taxes but also other outstanding tax liabilities, such as withholding taxes due from a business.

Filing an OIC does not automatically suspend IRS collection. However, the IRS usually will not continue collection if you have submitted a reasonable offer. The IRS will continue to enforce collection if it thinks you are using the OIC only to delay collection or fraudulently transfer your assets. The IRS will file a lien against your property and will not release the lien until your OIC has been fully paid.

The obvious advantage of the irs offer in compromise? It gives you the chance to begin your financial life anew without pressing tax claims. While you must pay the IRS something, this amount may represent a very small fraction of what you owe.

There are several small disadvantages to an IRS offer in compromise:

1. An OIC requires you to agree not to contest in court nor appeal the amount of your tax liability if your offer is accepted. But this would become a disadvantage only if the OIC was later rescinded by the IRS because you violated the agreement, and the IRS tried to collect the original disputed amount.
2. An accepted irs offer is a public record for one year. Anyone can examine your personal information and your finances. Such disclosures may hurt you in the future. Unaccepted offers remain confidential and are not public record.
3. Filing the OIC extends the 10-year statute of limitations for collecting taxes one additional year plus the time the OIC is under IRS review. This is particularly true when amended OICs are filed. If you offer installment payments, this added year doesn't begin until your final payment is made.
4. You will lose all tax overpayment's (refunds) for five years, including the current year, to the extent such application of refunds is necessary to pay the uncompromisable liability Even without the OIC, the IRS could automatically offset and apply these refunds to your tax liabilities. This is not a true disadvantage.
5. Finally, the IRS Offer In Compromise process requires you to fully disclose to the IRS your entire financial history This, however, is no more information than is under an installment agreement. If your offer is rejected, the IRS will know more about your assets, and your disclosures may even prompt an IRS audit. However, this seldom occurs as a result of an OIC.

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The opportunity to end your tax problems on terms you can afford, should clearly outweigh the disadvantages of an offer in compromise.

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