Welcome to David Chartoff CPA PC, a firm that provides Offer in Compromise, A Path to Settle Your Tax Debt.
The Internal Revenue Service (IRS) offers a solution to owed taxes through a Offer in Compromise (OIC) program. An Offer in Compromise is a way for taxpayers to settle their tax debts for less than the full amount owed. We are your advocates in degerming benefits, eligibility criteria, and the application process.
Understanding the Offer in Compromise (OIC) Program
The Offer in Compromise program is designed to provide taxpayers who are unable to pay their tax debt in full a fresh start. It allows eligible individuals or businesses to negotiate with the IRS to settle their debt for a reduced amount. This is a practical option for those who cannot afford to pay their entire tax bill without facing financial hardship.
Benefits of Offer in Compromise
- Debt Relief: One of the primary benefits of an OIC is that it provides genuine relief from the burden of outstanding tax debt. If accepted, you’ll pay a reduced amount, which can be significantly lower than your original debt.
- Fresh Start: An approved OIC allows you to start anew financially, as you’ll have resolved your tax debt issues with the IRS.
- Avoiding Harsh Collection Actions: By entering into the OIC program, you can prevent aggressive collection actions like wage garnishments, bank levies, or property liens.
Eligibility Criteria
To be considered eligible, you must meet specific requirements:
- Doubt as to Liability: You can prove that you don’t owe the tax debt in question. For example an error such as a calculation or miscommunication with the IRS.
- Doubt as to Collectibility: You can demonstrate that there’s doubt whether the IRS can collect the full amount owed within a reasonable timeframe.
- Effective Tax Administration: Even if the full debt can be collected, paying it would result in undue economic hardship or would be unfair and inequitable.
Applying for an Offer in Compromise involves several steps:
- File Tax Returns: Before applying for an OIC, all required tax returns must have been filed. The IRS won’t consider your application if you have outstanding tax returns.
- Complete Form 656: Fill out Form 656, the Offer in Compromise application, along with the required financial documentation. This includes details about your income, expenses, assets, and liabilities.
- Pay Application Fee and Initial Payment: Pay a non-refundable application fee and submit an initial payment with your application. This payment is a percentage of your proposed offer amount.
- IRS Review: The IRS will review it and verify the information provided after they receive the application. They may request additional documentation or clarification.
- Waiting Period: The IRS reviews your application can take several months
- Negotiation: The IRS might counter your initial offer. You can negotiate with them to reach an acceptable compromise.
- Acceptance or Appeal: You must adhere to all terms and conditions if your offer is accepted. This includes staying compliant with your tax obligations for the next five years. Also, you have the option to appeal the decision if your offer is rejected.
Conclusion
The IRS Offer in Compromise program offers a lifeline to individuals and businesses burdened by overwhelming tax debt. It’s a valuable opportunity to settle your tax liabilities for a fraction of the owed amount. If you find yourself in dire financial circumstances with no foreseeable way to pay your tax debt, the Offer in Compromise program might provide the relief you need. The application process can be complex. So, let David Chartoff CPA, PC provide the professional guidance to ensure the best possible outcome. Offer in Compromise can be a game-changer. Moreover, it’s essential to approach it with accurate information and a realistic understanding of your financial situation.
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