IRS offer in compromise is a great opportunity for taxpayers to start afresh as it helps them get rid of their tax debt. The idea is to give taxpayers some sort of relief if they owe any taxes, interests or penalties that they cannot pay off because of lack of income or assets. However, when applying to the IRS for an Offer In Compromise (OIC) you got to avoid some pitfalls that might lead to rejection. Having said that, in this blog post we discuss 7 IRS Offer In Compromise tips that you must follow to avoid rejection.
1. Do not hide your assets
The IRS has a variety of tools to verify whether the information provided by a taxpayer on Form 433-A is accurate or not. Make sure you do not give any wrong information or hide any income or assets when filing for an OIC, because if the IRS finds that out it will not only reject your application, but it might also file a case of perjury against you.
2. Regularly file your tax returns
One of the conditions of acceptance by IRS is the taxpayer needs to file tax return regularly for the next five years. If a taxpayer fails to file the tax return during the next five years, IRS can revoke the Offer In Compromise and reinstate the tax debt that a taxpayer owes.
3. Clear your debts when IOC is pending
Another important point that to remember is to clear all debts when the OIC process is pending. Taxpayers need to wait for approximately six months to one year for the IRS to process their request. During this period of time, avoid inflating tax bills, which is also known as pyramiding.
4. Check your eligibility before applying
Before applying for OIC, check whether you are eligible for one in order to avoid disappointment in future. Get all the information about current and filing requirements. Taxpayers with any open bankruptcy, too much equity, or any other disposable assets are not eligible for OIC.
5. Spend with care
The IRS reviews bank statements in order to verify the income of a taxpayer. If the IRS notices any frivolous spending, it might assume the taxpayer has undisclosed income and reject your OIC application.
6. Pay on time
A taxpayer needs to pay the offer amount only after the OIC application has been accepted. Depending on the conditions mentioned in the Offer In Compromise, a taxpayer may be required to pay the offer in installments or full. Make sure you do not default on your payments.
7. Seek professional help
Using the DIY approach to apply for OIC is not a good idea. The IRS tries its best to make you pay for the tax debt. If they find out that you can pay off the tax debt using your property, the IRS will force you to sell your property or other assets in your name. To avoid such problems take the help of a professional.
Last Few Words
Those were some of the essential tips that you need to consider when applying for Offer In Compromise. Following the tips will increase the chances of getting an approval for OIC and also help you avoid any roadblocks. If you are looking for professional assistance to increase your chances of getting an OIC, look no further than The Law Offices of Nick Nemeth. To schedule a free, no-obligation consultation with one of our experts, simply call (972) 426-2553 or visit our website at www.myIRSteam.com