IRS Offer in Compromise
Owe the IRS money? Worried about how the IRS will collect?
The Lee Law Firm knows that owing the IRS money is not a place anyone wants to be in, which is why they offer specializes services to help you with your unpaid taxes. We can help you settle tax debts, pay back taxes, take care of unfiled tax returns, stop tax liens and get rid of IRS penalty fees!
Can’t pay your tax debts? No problem!
The IRS provides a few options for taxpayers that cannot afford to pay their tax debts. One option is an offer in compromise (OIC), in which the IRS agrees to settle the debt at a reduced amount. It is a type of settlement, in which the IRS agrees to accept an amount less than the tax liabilities owed by the taxpayer.
IRS Requirements for OIC
The IRS will not accept an OIC if they believe the debts can be paid in full as a lump sum or through an IRS installment plan. To accept an OIC, the IRS must determine that the amount offered by the taxpayer is equal to or greater than the taxpayer’s ability to pay based on their assets and incomes.
If the taxpayer offers an amount lower than their potential payment ability, the IRS will not agree to the OIC. If the IRS determines that the taxpayer could, in the future, pay the full amount of the tax liability, they may not accept an OIC.
Taxpayers are afforded three different options in how they pay their offer in compromise. All three of the options require the taxpayer to pay a $150 application fee and file a Form 656 at the beginning of the payment plan.
- In a lump sum plan, the taxpayer must satisfy the debt in 5 or less payments. Taxpayers choosing the lump sum payment option must pay a minimum of 20% of the offer and a $150 application fee at the beginning of the payment plan.
- In a short term periodic payment offer, the taxpayer must repay the full offer amount within 24 months. The first payment and the $150 application fee is due at the beginning of the payment plan.
- In a deferred periodic payment offer, the taxpayer must repay the full offer amount in 25 or more months, but less than the remaining statutory period for collecting the tax. The first payment and the $150 application fee is due at the beginning of the payment plan.
It is important to note that the IRS is not required to accept the OIC presented by the taxpayer. They maintain the right to negotiate the offer amount and terms of the offer.
Think you might qualify for an offer in compromise? We can help!
Our attorneys have helped many people just like you settle their tax debts and obtain a debt free future!