Many people are surprised to learn that the IRS does make deals on taxes owing, including all penalties and interest. The IRS cuts these deals to get you back in the system as a current taxpayer and to collect something (even if it’s small) on the old taxes owing. One of the ways you could you could make a deal to pay less than the full amount of your tax debt is through an Offer in Compromise (OIC).
There are three types of an OIC:
The requirements for an OIC are strict. Not everyone qualifies. There are very specific eligibility requirements for you to be accepted, but if you qualify, an OIC can be an excellent way to reduce the total amount you owe. Ordinarily, we would consider an OIC when a client owes at least $15,000 and has very little in the way of equity in assets. You must also be using your monthly income to pay your living expenses without much left over each month.
As part of the approval process, you will undergo an extensive review by the IRS of your current financial condition. If accepted into the OIC program, you will continually be reviewed by the IRS to ensure that your financial condition hasn’t changed. In other words, the IRS is looking to see if you can afford to make larger tax payments.
Here’s the good news. Even if you don’t qualify for an OIC, that doesn’t mean you have to pay 100% of your tax debt. There may be other techniques that we can use to pay less than the full amount such as a partial pay installment agreement or currently not collectible status.
The only way for us to determine the best course of action for you is to speak with you. Call now for a free consultation or request a free copy of our book, The Essential Tax Resolution Survival Guide.
