Despite its reputation, the Internal Revenue Service can be flexible in situations where you owe more in taxes than you can feasibly pay. The IRS will consider your unique set of circumstances and your ability to pay in terms of your income, expenses, and asset equity. From there, the IRS generally approves an offer in compromise submission when the amount of money being offered represents the greatest amount of money that the IRS can expect to collect in a reasonable period.
How to file an offer in compromise form The trick is knowing how the system works. First, you have to file an OIC application. Before the IRS accepts the application, the IRS will check to see that you’ve filed all of the required returns and made your estimated payments on time. It’s also important to know that you can't apply for an OIC if you’re involved in open bankruptcy proceedings. If you meet those conditions, you can submit your application alongside the $205 application fee. You will also need to make an initial payment, the value of which will depend on your offer and the payment option you choose. The two payment options when submitting an OIC form Here are your options:
If you meet the low-income certification guidelines, you won’t have to pay an application fee or an initial payment, nor will you need to make monthly installments while the IRS is evaluating your offer. For others, while you await a decision regarding your offer, your nonrefundable payments and fees will be applied to the tax liability. You can designate payments to a specific tax year and tax debt. Meanwhile, keep the following implications of your filing in mind:
What to expect if your OIC form is accepted If your offer is accepted, these could be the terms of your situation:
What to do if your OIC form is rejected However, if your offer is rejected, keep these details in mind:
At the end of the day, it’s all a matter of government discretion. The IRS provides fair consideration to each properly submitted OIC application. In recent years, about 40% of OIC submissions have been accepted. So, what can you do to improve the odds that your application will be approved? Work closely with a financial professional by contacting us today. Comments are closed.
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