Lower Your Tax Burden with an Offer in Compromise

An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship.

Offer In Compromise Help

The offer in compromise process can be extremely confusing and complex.  Freeman Tax Law will help you successfully navigate and complete the application process.  We will communicate directly with the IRS on your behalf.  We have the expertise and experience to insure that you are represented in the most professional manner possible.

Please contact us today to schedule a confidential consultation to discuss your IRS offer in compromise options.

 

IRS Offer in Compromise Tips

An offer in compromise is an agreement that is reached between the IRS and a taxpayer that allows you to settle your tax debt for less than you owe.  In most cases, if you can fully pay your tax liability through an installment agreement or other means, you will not be eligible for an offer in compromise.  The IRS will look at number of factors in determining whether they will accept your offer.  This includes: ability to pay, income and expenses, and asset equity.

To be eligible, you must meet the following requirements:

  • Do not have an open bankruptcy proceeding
  • Have filed all required tax returns.
  • Have made all required estimated tax payments and federal tax deposits (if applicable).

An IRS has a tool that can be used here  - Offer in Compromise Pre-Qualifier

 

The Process

There is a formal process that needs to be followed for an offer in compromise.  Your application will need to include the following:

  • Form 656, Offer in Compromise
  • Completed Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed, if applicable 
  • Completed Form 433-B (OIC), Collection Information Statement for Businesses, if applicable 
  • $186 application fee, unless you meet Low Income Certification 
  • Initial offer payment, unless you meet Low Income Certification

You must select a payment option and include the payment with your offer. The amount of the initial payment and subsequent payments will depend on the total amount of your offer and which of the following payment options you choose:

Lump Sum Cash: This option requires 20% of the total offer amount to be paid with the offer and the remaining balance paid in 5 or fewer payments within 5 or fewer months of the date your offer is accepted.

Periodic Payment: This option requires the first payment with the offer and the remaining balance paid within 6 to 24 months, in accordance with your proposed offer terms. Under this option, you must continue to make monthly payments while the IRS is evaluating your offer. Failure to make these payments will cause your offer to be returned. There is no appeal. Total payments must equal the total offer amount.

You must select a payment option and include the payment with your offer. The amount of the initial payment and subsequent payments will depend on the total amount of your offer and which of the following payment options you choose: Lump Sum Cash: This option requires 20% of the total offer amount to be paid with the offer and the remaining balance paid in 5 or fewer payments within 5 or fewer months of the date your offer is accepted. Periodic Payment: This option requires the first payment with the offer and the remaining balance paid within 6 to 24 months, in accordance with your proposed offer terms. Under this option, you must continue to make monthly payments while the IRS is evaluating your offer. Failure to make these payments will cause your offer to be returned. There is no appeal. Total payments must equal the total offer amount.

If Your Offer is Rejected

If the IRS rejects your offer in compromise, you will be notified by mail. The rejection letter will explain the reason that the IRS rejected the offer and will provide detailed instructions on how the taxpayer may appeal the decision to the IRS Office of Appeals. The appeal must be made within 30 days from the date of the letter. In some cases, an OIC is returned to the taxpayer, rather than rejected, because the taxpayer has not submitted necessary information, has filed for bankruptcy, has failed to include a required application fee or nonrefundable payment with the offer, or has failed to file tax returns or pay current tax liabilities while the offer is under consideration. A return is different from a rejection because there is no right to appeal the IRS’s decision to return the offer.

You can formally appeal a rejected offer in compromise, or you can contact the agent who signed the letter and ask for a reconsideration . Often, instead of forwarding appeals to the Appeals Office, the IRS will reconsider your offer and engage in further negotiation.

To start a formal appeal, a letter needs to be sent within 30 days of the date of the rejection letter.   Appealing is not a legal right -- it's within the IRS's discretion. You cannot take the IRS to court for rejecting your offer or your appeal.

Offer in Compromise - Attorneys at Freeman Tax Law

With extensive knowledge of how the IRS works, and years of experience dealing directly with the IRS - we have the ability to properly guide you in the offer in compromise process.  Please contact us today to see if an offer in compromise is the best option for you.