If financial constraints have been preventing you from settling your tax liabilities, an Offer in Compromise can be a way out of the problem. An Offer in Compromise is an agreement between a taxpayer and the IRS, allowing for a settlement of debt for an amount less than the actual debt. If a taxpayer is financially capable of paying their debt in full, they are not eligible to file an OIC. It is also important to know that there is no legal right to get a waiver on your tax liabilities, and that it is at the sole discretion of the IRS. Continuing on the subject, this blog covers all you need to know about the Offer in Compromise. Let’s take a look.
Eligibility Criteria for Filing an IRS Offer in Compromise
Although everyone would like to have their tax liabilities reduced, before you apply, it is important to check whether you qualify for an OIC settlement. The IRS has certain qualification criteria that taxpayers need to fulfill to qualify for an OIC. To qualify for OIC, you need to show evidence to the IRS that you fall under one of the following conditions:
- Doubt about collectibility – When a taxpayer agrees to owe the taxes but shows an inability to pay the tax debt in full, they may file for an OIC.
- Effective tax administration – If a taxpayer is facing financial hardships to settle their debts, they can file OIC under Effective Tax Administration head.
The Process of Filing OIC
Applying for an OIC with the IRS is a formal process that a taxpayer needs to follow to get approval for this type of settlement. As a part of this settlement, taxpayers need to fill out Form 656 and pay the required application fee. Along with the application form and fee, they need to provide their financial proofs including vehicle registrations, bank records, and other documentation using the Form 433-A (Individuals) or Form 443-B (Businesses).
Must Read: 7 IRS Offer In Compromise Tips You Must Follow to Avoid Rejection
Want to Settle Your IRS Tax Debt? Help is Here!
If you are planning to apply for an IRS Offer in Compromise, it is advisable to seek the help of an IRS tax attorney for professional assistance. Hiring a tax attorney helps minimize the chances of OIC application getting rejected as legal experts are aware of the intricacies involved. If you are looking for an experienced tax attorney, look no further than the Law Offices of Nick Nemeth. We have a team of experienced IRS tax attorneys specialized in handling all sorts of IRS tax-related issues. To schedule a consultation with our experienced attorneys, simply call (972) 426-2553, or fill out our contact form and we will get back with you, shortly.