The IRS OIC: All You Need To Know

A process that enables you to pay just a potion of your tax debt (as little as 1% of the tax due) to the IRS is called an Offer in Compromise (OIC).  To be able to qualify for this, strict requirements must be satisfied.

For tax debt to be reduced is at the discretion of the IRS as taxpayers have no right to request for this. As long as an OIC is correctly submitted, the IRS is obliged to give it a just amount of consideration, although getting accepted is slim. Moreover, you can have the IRS Appeals Office review your OIC further if it's rejected.

Submitting an OIC has a formal and strict process involved. Your initial step is to accomplish IRS Form 656, Offer in Compromise. This isn't free, and you have to attach a $150 fee upon submission. If you can prove that you qualify under certain poverty guidelines, you may be exempt from this $150 fee. If you are claiming exempt status, the Form 656 booklet has an Application Fee Worksheet that should be submitted.

The OIC process isn't quick and easy. When you accomplish the initial forms, there will be numerous other steps to take. As soon as you have submitted the forms, you'll be asked to include financial documents proving your case. These may include vehicle registrations, bank records, pay stubs, and a multitude of other documents that you may or may not have readily on hand. You must assess the benefits and the costs of utilizing this method to fix your IRS issue because it is considerably time-consuming to file an Offer in Compromise. Also, filing such large quantities of information to the IRS may provide them with the needed information to more aggressively collect the debt owed to them if your OIC is rejected. Before you file an OIC, make sure you have a substantially compelling case.

There are several conditions that need to be present in order for you to qualify for OIC consideration. A concept that needs to be present is doubt as to collectability. This basically means that there should be a considerable amount of doubt about the IRS's ability to collect the tax debt from you, either at this present time, or anytime in the future. Another condition would be whether or not you truly owe the tax bill that the IRS is claiming. You may qualify for an OIC if you can give enough evidence to question your liability for the tax debt. The third concept essentially says that paying your tax debt fully would put you at an extreme economic hardship and that it would be inequitable or at the very least, unfair.

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Originally posted 2008-11-20 22:37:38. Republished by Blog Post Promoter

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