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An offer in compromise may help you with your back taxes

| Mar 30, 2021 | Firm News |

An offer in compromise (OIC) might allow you to pay off your back taxes completely, but it’s not a guaranteed choice. To begin, all an individual must do is file a request with the Internal Revenue Service (IRS.) The trick is getting the IRS to agree.

How to convince the IRS to accept an OIC

The IRS is under no obligation to accept an offer in compromise but may find a guaranteed smaller amount relatively soon, rather than waiting indefinitely for a full amount, advantageous.

The IRS considers the following factors when granting an OIC:

  • Their income
  • Their expenses
  • Their obligations
  • Their assets

Taken together, these will reflect an individual’s ability to pay their tax bill. Additionally, those who wish to apply for an OIC may not be in a current bankruptcy proceeding.

What happens if the IRS accepts my OIC?

If the IRS accepts your offer, you will have to meet the terms you selected in your original application. Either you pay off the offered amount in five installments or you will make a lump payment and continue with new, lower tax payments.

How will I know if an OIC is right for my situation?

Tax debts are among the most stressful debts that anyone can face at any given time. There are other options, including bankruptcy, which can allow for some relief in tax debt. The truth is, any decision to reorganize, address or decrease your tax bill is complicated by the sheer weight of US tax law.

To properly understand any action you may take, you should contact a tax attorney. They will review your situation with you and offer you any possible solution to the tax problems you face.