Offer In Compromise Or Bankruptcy, Learn How To Settle With The IRS For Pennies On The Dollar!
Learn which program is best for you settle with the IRS review, offer in compromise or bankruptcy, how to settle with the IRS for pennies on the dollar!
The IRS Compromise Program - authorizes the IRS to compromise outstanding tax obligations with financially burdened taxpayers for less than the full tax due. In essence, the IRS makes a deal with you to pay all you can reasonably afford and forgives any balance instead of filing bankruptcy.
The OIC program is not new. The IRS has compromised tax liabilities for over 80 years, but historically discourages OICs as seen by the fact so few taxpayers over the years took advantage of the irs offer and compromise reviews.
Then in 1992, the IRS adopted new policies and procedures to greater promote taxpayer use of OICs and to streamline their handling cases. IRS agents increasingly advise delinquent taxpayers about the OIC program, which is now more lenient.
It is not surprising that the IRS has found the OIC, more productive when dealing with tax-burdened Americans. Too many long-term installment agreements fell into default or bankruptcy and too much IRS effort was lost enforcing those agreements. And the heavy hand of the IRS forced too many taxpayers into bankruptcy or made them impoverished to the point they stayed noncollectable.
The irs offer in compromise vs. bankruptcy program:
Now proved a realistic way for the IRS to bring in revenue it otherwise would never collect, or at least not efficiently, while giving the taxpayer a fresh start. The IRS’s new attitude toward offer in compromise is best summarized in their policy statement.
The service will accept an OIC when it is unlikely that the tax liability can be collected in full and the amount offered reasonably reflects collection potential. An offer in compromise is a legitimate alternative to declaring a case as currently not collectible or to a protracted installment agreement.
The goal is to achieve collection of what is potentially collectible at the earliest possible time and at the least cost to the government.
In cases where an OIC appears to be a viable solution to a tax delinquency the service employee assigned to the case will discuss the compromise alternative with the taxpayer and, when necessary assist in preparing the required forms. The taxpayer will be responsible for initiating the first specific proposal for compromise.
The success of the OIC program will be assured only if taxpayers make adequate compromise proposals consistent with their ability to pay and the Service makes prompt and reasonable decisions.
Taxpayers are expected to provide reasonable documentation to verify their ability to pay. Acceptance of an adequate offer will also result in creating, for the taxpayer, an expectation of and a fresh start toward compliance with all future filing and payment requirements.
Any taxpayer can file an irs offer in compromise vs. bankruptcy.
- married couples
- incorporated businesses
- non-profit organizations
- trustees of trusts
- executors of estates
Any person or entity that can incur a federal tax liability can file an Offer In Compromise, to settle that liability.
The OIC program also compromises virtually any personal, estate or business taxes, including:
- personal income taxes
- corporate income taxes
- estate taxes
- unemployment taxes
- withholding and employment taxes
- road taxes
Nor does it matter how old the tax may be. The OIC may extend to old taxes on which collection has been suspended, recent taxes currently placed for collection, or taxes for the present year which have not even been assessed.
You may also combine the various tax obligations, regardless of tax type or age, into one OIC. Finally, you can compromise taxes, regardless of amount.
There are only two circumstances when an offer in compromise will be considered by the IRS.
- 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 collectibility cases).
- Where there is doubt about the taxpayer’s tax liability (doubt of liability cases). A case may involve both doubt of collectibility and liability
Compromises of civil liability do not compromise criminal liability in the same case, and vice versa.
Criminal liability may be compromised if:
- it involves a regulatory provision of the Internal Revenue Code or associated statues and,
- if the violations are not premeditated with the intent to defraud.
The IRS policy is to accept an offer in compromise:
Only when it is in its best interests, as well as that of the taxpayer. In doubt of collectibility cases, the IRS considers three questions:
- Could the IRS collect more from you (through seizure of assets or wages) than you offer?
- Convince the IRS that its more cost-effective for the IRS to accept your offer rather than enforce collection.
- Would the IRS be better off to wait for some future date when your financial position may improve?
- The IRS will consider your possible future wealth as well as your present wealth.
- Would the public believe that accepting your offer was incorrect and improper?
Answer no to each question and your offer stands a good chance of acceptance. The IRS has ten years to collect unless you discharge the taxes in bankruptcy, and the IRS frequently gambles it will collect more someday rather than settle for too little today.
You can pay the offered amount:
- In one lump sum payment upon acceptance of the OIC or a specified time thereafter.
- In installments, but usually not beyond five years.
- Through a combination of a lump sum payment and installments.
The IRS will settle faster for a lump sum payment and usually for considerably less than under installments.
The ultimate goal is a irs offer in compromise that is in the best interest of both the taxpayer and the service.
The IRS Offer in Compromise Program - authorizes the IRS to compromise outstanding tax obligations with financially burdened taxpayers for less than the full tax due. In essence, the IRS makes a deal with you to pay all you can reasonably afford and forgives any balance.
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If you have an ongoing issue with the IRS that has not been resolved through normal processes, or you have suffered, or are about to suffer a significant hardship/economic burden as a result of the administration of the laws, contact the Taxpayer Advocate Service
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