The IRS Offer in Compromise (OIC) is a voluntary debt relief program intended to allow taxpayers to settle a tax debt for less than the full amount owed. The program is designed to help taxpayers who cannot pay their taxes and have no other way to resolve their tax debt. Under an Offer in Compromise, the taxpayer and the IRS agree to a reduced tax amount to settle the debt. The IRS considers factors such as the taxpayer's ability to pay, income, assets, and liabilities when determining whether an offer in compromise is acceptable. Dallas residents interested in this program, continue reading as we’ll discuss the requirements, benefits, and drawbacks to understand whether you should take advantage of the OIC program.
IRS Offer in Compromise Tips: Requirements for an OIC
OICs are IRS programs meant to settle tax debts for a lower amount than the full amount owed. To qualify for an OIC with the IRS, you must do the following:
- File all required tax returns
- For the current year, you should have made all required estimated tax payments
- For the current quarter, all required federal tax deposits must be made by business owners with employees
- Not be in an open bankruptcy proceeding
Additionally, you must demonstrate that paying your full tax liability would create a financial hardship or be unfair and inequitable. If you think any exception applies to you, get in touch with a Dallas IRS attorney to understand whether the IRS Offer in Compromise program is right for you.
What are the Benefits of the IRS Offer in Compromise?
The top three benefits of an OIC are:
- The amount of taxes you owe can be significantly reduced;
- It can provide relief from interests and penalties accruing on your unpaid tax debt; and
- All collection activity by the IRS against you will be stopped.
What are the downsides of an OIC?
The three biggest downsides of an IRS offer in compromise are:
- You have to pay a non-refundable application fee;
- The process can be slow, taking up to six months or more; and
- You may have to agree to a payment plan, which could last for years.
Final Words
To get a good shot at getting approved for IRS offers in compromise taxpayers can consult qualified and experienced Dallas tax attorneys who analyze your chances of success before charging you for their debt attorney services. Suppose the Offer in Compromise is not the way to go, reputable tax attorneys in Dallas, TX will look at other options (IRS tax installment agreement, waiting out the statute of limitations, IRS penalty abatement, liquidation bankruptcy, reorganization bankruptcy, etc.) and provide the best possible IRS debt help you could ever expect. IRS debt attorneys have a success rate for getting approvals for IRS Offers in Compromise because they only file offers when they see a good chance of success. However, it's up to the taxpayer ultimately to decide whether taking advantage of the OIC program is the right decision for them.
