Individuals that owe huge amounts in unpaid taxes that cannot pay turn to an “offer in compromise”. OIC is an agreement between the IRS and a taxpayer to settle the taxpayer’s tax liability for less than the owed amount. The IRS reviews the income and assets of the taxpayer and documents every detail of their financial situation, before deciding whether or not sanctioning of an OIC is a justified decision. Many applications submitted to the IRS are often rejected due to negligence on the taxpayer’s part. Most taxpayers are not familiar with how to get an offer in compromise, which increases chances of a rejection. We discuss the four tips that should guide your conduct to improve your chances of getting approval on your OIC application.
1. Don’t accumulate more tax debt
The usual waiting period for the IRS to process an OIC request is 6-12 months. If an applicant continues accumulate more debt, their chances of landing an approval are automatically lowered. Putting your tax payments on hold during the process of collection is a terrible idea. The applicant should make sure to pay quarterly estimated tax, instead of waiting for the determination on their OIC application.
2. Appeal an unfavourable decision
Many applicants don’t know that they can appeal an offer denial or how to go about the process. Even if you think IRS has given you a good offer, an appeal may be more financially beneficial, provided you know how to take it to the next level. The IRS accepts about a third of OICs, and the primary reason for such a low rate is the taxpayer’s lack of knowledge on the appeal program.
3. Don’t withdraw your OIC Application
The offer in compromise examiner evaluates details provided by the applicant in the form and fixes a date for a meeting in the office. There are times when the examiner might suggest that the applicant opts for an IRS’ collection alternative, i.e. an installment agreement. Instead of accepting the alternative, try convincing the examiner to approve your application, and in the worst case scenario, file an appeal.
4. Don’t submit “junk” offers
The applicant needs to provide supporting documents for all the figures entered in the form to get OIC approval. Refrain from mentioning junk offers, for instance, a friend lending you money to pay taxes, as they have no documentation or support logic and increase chances of rejection. You will lose the mandatory 20 percent of the offer that you need to pay as deposit with the request. If you later submit a legitimate offer, you will have to pay another 20 percent.
The IRS always makes decisions that are in the best interest of the government. This means you need to know the rules of the game well to win it. The safest way to reduce or eliminate chances of rejection is seeking expert legal advice. Law Offices of Nick Nemeth, PLLC is a dynamic team of caring professionals who work hard to take care of your IRS tax problems. Nick Nemeth has years of experience in helping individuals and businesses resolve major tax issues. Call and schedule your free no-obligation consultation today to discuss the best tax settlement solution for your financial situation. To speak with Nick Nemeth personally and learn more on how we can help you resolve IRS troubles, fill out our contact form or call us at (972) 426-2553.