The Offer in Compromise (OIC) program is an IRS program designed to assist taxpayers who have substantial tax debt and are unable to pay in full. Typically, the IRS (or state of Maryland) will negotiate a figure that is equal to the greatest amount they expect to recover over a reasonable time frame but less than what the taxpayer actually owes.
There are a few eligibility requirements, but if you are not in open bankruptcy proceedings and are current with your tax filings, you could potentially pre-qualify for the Offer in Compromise program.
Keep reading to learn more about how to apply, which factors the IRS considers before accepting an OIC application, and how to approach negotiations to get the best possible offer in compromise for you and your family.
Depending on your situation, there are several forms that you might need to send to the IRS to complete your application for an offer in compromise. Make sure to complete these forms accurately and on time to increase your chances of success. Here’s a helpful link to the IRS’ Offer in Compromise program booklet, which includes each of the forms below.
The IRS generally accepts Offers in compromise from taxpayers who meet at least one of the following criteria:
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During the negotiation process, the IRS will thoroughly examine your finances to determine whether you could potentially pay the tax debt in full in the future. Here is a list of things you can do that will help put you in the best
If the IRS denies your application for an offer in compromise, you have the right to file an appeal by submitting a Form 13711 (“Request for Appeal of Offer in Compromise”), but you must do so within 30 days of the date your rejection notice. If you would like our office to conduct the appeal on your behalf, you must provide the IRS with a copy of a Power of Attorney authorizing us to proceed with the process on your behalf.
A successful appeal must address and refute (with evidence) each issue raised in the original rejection. Although accepted appeals provide taxpayers with another opportunity to negotiate an offer in compromise, it will usually result in more favorable terms for the IRS than if you had succeeded with your initial application, so it’s important to get things right the first time.
The Offer in Compromise program is the most comprehensive resolution for tax debts. It’s the one you always hear about on the radio and television because, if approved, you could potentially settle for as little as a single dollar.
However, for the same reason, an OIC can be one of the most difficult resolution tactics to execute successfully. We all want to pay less in taxes, but in this instance, you must prove you should be eligible for the program through diligent record-keeping as well as a smart and savvy approach to negotiation.
If you owe more than $10,000 in back taxes, our attorneys might be able to help you reduce your liability by negotiating an offer in compromise with the IRS or state of Maryland on your behalf. Please complete this brief form or call us directly at (410) 872-8376 to schedule your free consultation. We have helped thousands of taxpayers reduce or eliminate their tax debt, and we would love to speak with you about your options for debt reconciliation with the IRS.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject. Please read our full disclaimer here.
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