March 2, 2010

Is An OIC For You?

One solution you may like to consider to help you solve IRS problems is to file an Offer in Compromise or OIC.

Advantages

You can make a deal with the IRS to allow you to settle whatever you can afford of your back taxes while the rest is forgotten. You'll have zero back taxes to settle and you can start over.
Your stress will be reduced considerably because property and wages cannot be seized during review.
If the OIC is honored and you have paid the balance negotiated, the IRS must release tax liens in 30 days. Filed on public record will be a Notice of Release of Federal Tax Lien. Your credit rating will improve.

Disadvantages

Your OIC will be public record for a year. Anybody can access your personal and financial information. This might cause future problems. If the IRS does not accept the OIC, your information remains confidential.)
For 5 years, you must comply with all the provisions of the IRS Code when the IRS accepts your offer.
It might take as long as a year for an OIC to be reviewed by the IRS and whether it was honored or rejected, the ten-year statute of limitations is extended plus 60 days. New regulations state, however, that OICs left pending for two years are deemed approved.
You do not get to appeal or question the tax debt balance if the OIC is accepted.
You lose all tax refunds, including interest for the periods extending through the calendar year that the IRS accepted the offer.
Disclosure of your entire financial history is needed, which might cause further audits if they find that you were hiding something.
If you default on your OIC, your tax debt including interest and penalties will be reinstated in full, less the payments you have already made.