Offer in Compromise, or OIC, is a provision initiated by the Internal Revenue Service to help taxpayers who are unable to clear their tax debts. If an OIC is approved, the IRS agrees to settle the debt for an amount less than the actual debt. To decide the qualification of an OIC application, the IRS looks at the taxpayer’s circumstances, income, property, ability to pay, expenses, assets, and various other dynamics. Continuing on the subject, in this blog post, we present five tips for filing an IRS Offer in Compromise. Read on.
1. File Tax Returns
The IRS puts taxpayer in the tax dodging category if they don’t file their tax return. You should never delay filing your tax returns, as it is one of the key parameters considered by the IRS to assess your OIC application. Even when an application is accepted, the taxpayer needs to file tax returns for the next 5 years, failing which the IRS can revoke the decision. Taxpayers, therefore, should file the tax returns before applying for OIC.
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2. Don’t Hide Assets
The Form 433-A OIC, which is filled by the applicant, should include all the details regarding the taxpayer’s sources of income, total income, and all the assets owned. When processing an OIC application, the IRS assesses the net worth of all the holdings of the applicant. So, make sure that the information you provide is true and complete. If the IRS finds some discrepancy in the information provided, not only the application is rejected, but a perjury case may also be registered against the applicant.
3. Don’t Wait For Clearance
In some cases, the IRS may take 6 months to a year to process the OIC application. Many applicants tend to put everything on hold until the application gets processed, which is always a mistake. If your need to pay a quarterly tax installment, do it without a second thought; not paying any tax amount until the application is processed is known as “pyramiding”, which results in tax bills inflation.
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4. Propose a Reasonable Settlement Amount
The settlement amount should be filled carefully when submitting an OIC application. You can’t expect the IRS to accept your application if you fill any unreasonably low amount. Even if you are filling a low number, be sure to include supporting documents. Applicant should also be careful about their spending, as the IRS revises the bank statements and if they’re convinced that applicant can repay the debt, the OIC application gets rejected.
5. Consult an IRS Tax Lawyer
Applying for an OIC on your own may not be a good idea. The IRS has a team of examiners that know what’s best for the tax body’s interests and they make sure you pay tax debt, even if it calls for selling your property or other assets. It is, therefore, important to hire an IRS tax professional with proven expertise in the IRS tax law and provisions. An IRS tax lawyer can help you protect your rights and find your way out of all sorts of IRS tax related problems.
Looking for an IRS Tax Expert? Contact Us!
If you are considering to file for an Offer in Compromise, speak with the IRS tax attorneys at the Law Offices of Nemeth & Flores, who have the expertise to help you overcome any IRS tax related problem. Our team has extensive experience in providing help for a number of IRS tax problems, ranging from IRS Offer in Compromise tips to representing cases in the IRS Office of Appeals. For a no-obligation consultation, simply call at (972) 426-2553 or fill out our contact form.
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