Questions on Offer in Compromise with Nick Nemeth
  • August 11, 2017
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An Offer in Compromise (OIC) is one of the tax settlement methods offered by the IRS to its taxpayers, to help them settle their taxes for less than what they actually owe. The IRS, however, accepts an OIC only when it is fully convinced that the defaulter cannot pay the due taxes in full, not even through a relaxed deferred tax payment plan. Understanding OIC and its intricacies is not easy for a common man, and therefore, most taxpayers have several questions to ask. In this post, we discuss some of the most frequently asked questions and their answers. Let’s take a look..

Q.1 On what grounds can I request an OIC?

An OIC can be requested on three grounds.

  • Doubt as to liability
  • Doubt as to collectibility
  • Effective Tax Administration

Q2. What is the difference between Doubt to Liability and Doubt to Collectibility?

If a taxpayer does not agree to the amount of tax liability as claimed by the IRS then they can request an OIC under Doubt to Liability. For this, you need to complete Form-656 L.

In case the taxpayer agrees to the amount of tax liability due, but is unable to pay the amount,  they need to request OIC on Doubt to Collectibility ground. For this, you need to complete Form-656 B.

Q3. Do I need to pay a fee when applying for an OIC? Can the fee be waived?

Yes, you need to pay a non-refundable fee of $186 with Form 656. The only circumstances under which this fee can be waived off are:

  1. If the OIC is requested based on Doubt as to Liability.
  2. If the applicant qualifies for low income exception.

Q4. What is low income exception?

Low income exception applies to taxpayers with monthly income less than or equal to 250 percent of the poverty guidelines. Taxpayers who qualify low income certification get various exemptions from IRS. For example:  they are not supposed to pay the fee when applying for OIC, nor do they need to pay the monthly installments while their offer is under evaluation.

Q5. What if I make an offer that is not high enough or I make a calculation mistake?

Do not worry if you made a calculation mistake or did not offer an amount equal to what the IRS expected. The IRS gives taxpayers a second chance to make changes to the OIC. In case you do not make a change, your request will automatically stand cancelled. The only thing you need to worry about is intentionally sending false information to the IRS as this may lead to you being subjected to criminal or civil penalties.

Q6. Can I send one OIC request form both for personal and business taxes?

If you are running a sole proprietorship business that is linked to your SSN, you can send one OIC request both for personal and business taxes. If, however, you are running a business that is a partnership, LLC or corporation, you need to complete two different forms for making the OIC request.

Q7. My offer was rejected, what do I do now?

If your offer is rejected, but you disagree with it, you can appeal within 30 days from the date of rejection. The IRS will review your case and send you an answer accordingly. In case you have no reason to disagree with the rejection, it is advisable to pay your tax dues as soon as possible, to avoid paying any additional interest or penalty.

Get Offers in Compromise Help!

If you need more information on tax-related matters or need to resolve any IRS debt problems, please contact us. You can fill out our Free Tax Analysis form or feel free to call us at (972) 426-2553 for a free consultation with Attorney Nick Nemeth.

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What Our Clients Have to Say

Susan WilsonSusan Wilson
03:27 25 Jan 23
I have been very pleased with the solid counsel and guidance that Nick Nemeth has provided me regarding my tax issue. I found him to be honest and straightforward which I appreciated. I was impressed with his relevant experience and knowledge . He has definitely brought me peace of mind during a difficult and stressful time.
Sarah HowardSarah Howard
03:44 14 Nov 22
I would like to thank Mr. Nick and his staff for the superb help that I received from them. My IRS problem was resolved quickly and efficiently. It took 2 visits to convince me that I was over my head. I thought that I could call the IRS, appeal my tax notices and settle on a payment plan on my own. After many phone calls to the IRS, waiting sometimes more than 4 hours with no resolution to speak of, it proved to be extremely difficult and stressful. Revisiting Mr. Nick was a huge wake up call. My account was reviewed, and a payment plan was established with the IRS within a week. I will be forever grateful to the staff who worked on my case and especially to Lorna who listened to me vent while going through this painful process.
00:33 07 Aug 22
I cannot say enough good things about Nick and his team. When I first met with Nick he was up front, honest, friendly and efficient. When I worked with one of his attorneys, Eric B, I was just as pleased. All of the staff there are nice and very helpful. I wish I hadn't waited so long to get help with my issue. Over 6yrs I tried getting through and getting anywhere with the IRS and hardly made any progress. I know this may not be the case for all, and even I thought it would take longer than it did, but 3mos and they had my situation straightened out. I still can't believe it. Thank you thank you THANK YOU for all that you did for me. This is a huge burden gone out of my life now thanks to you. If anyone needs help out there, I know you may not want to shell out more money to get their help but it may just save you in the long run.
Spoilly GirlSpoilly Girl
23:49 03 Aug 22
The Nemeth Law team is exceptional. They treat their clients like a family member who is in crisis. They want you to get the best possible outcome. I really appreciate everything that they did for me. Jake and Ashley had the greatest role in my case and it all turned out for the best for me. Thank you Nick and team for easing my fears and getting me through the long process. I'm truly grateful.
Eddie WaltEddie Walt
19:44 12 Jul 22
During a time in which competent, professional service at a fair price seems to have disappeared, Mr. Nemeth and his team are a refreshing breath of fresh air.From my first phone call to the final settlement of our case with a non-responsive IRS, they under-promised, over-delivered and were in constant courteous contact to make sure we knew exactly what was happening and where we stood.I hope to never need their services again, but, should I receive another friendly letter from the IRS...I know who to call!
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