IRS Offer in Compromise

Our credit specialists have extensive expertise with planning, preparing, and negotiating Offers in Compromise ("OIC"). If you qualify, an Offer in Compromise is frequently the ideal solution for resolving your delinquent tax liability. In the last published IRS statistics, the IRS reports that the average discount on accepted Offers was 88% (only 12 cents on the dollar was paid by Americans with accepted OICs), and that the average acceptance rate was 47.6%. Given the savings possibilities on accepted OICs, the experienced team of Tax Specialists at NFS specializes in the Offer in Compromise program and works very hard to see if our clients qualify for an OIC. Call us today to see if you qualify.

The OIC is still a relatively new IRS instrument created in 1992 by Section 7122 of the Tax Code. The two primary grounds under which an OIC can be successfully negotiated with the IRS are: "doubt as to collectability" (e.g. the taxpayer is unable to pay the full burden), or "doubt as to liability" (e.g. the taxpayer contends that they owe the debt). There is a more recent third ground for acceptance, "effective tax administration" (e.g. the IRS wants to get as much as they can, and they may potentially think that 12 cents on the dollar is as good as they can do on a taxpayer). For an Offer in Compromise to be accepted, however, the taxpayer has the burden of proof that they either have no possible means of paying the tax or that they do not actually owe the tax.

The primary determinant on "doubt as to collectability" is based on a taxpayer's personal financial profile; including income, expenses, and assets. The IRS sets strict guidelines for income, allowable expenses (categorized as: Living, Housing, Transport), and available equity in owned assets. An additional benefit of submitting an OIC is that IRS Restructuring Act prohibits the IRS from collecting a tax liability by levy during the period in which the Offer is being processed, or 30 days following rejection of an offer, or during the appeal of an OIC. This window of non-collection is frequently a respite for our clients to avoid any IRS collection actions, thereby securing additional time for clients to pay and prevents the IRS from seizing any assets in the interim.

If accepted, payment terms for an Offer in Compromise can be in one of two methods: cash (typically 20% with submission of offer and 80% within 90 days of acceptance), OR short-term deferred payment (24 monthly payments starting with submission of offer).

Call us if you have any questions about the IRS guidelines or the process for preparing, submitting, and negotiating an Offer in Compromise. For your FREE Tax Assessment Call 1.888.243.7888

Tax Relief Alternatives

There are five alternatives for resolving your tax liability:

• Payment Agreement - Installment agreements and/or Payment plans
• Settlement - Offer in Compromise
• Discharge - File Bankruptcy
• Expiration - Let the Statute of Limitations expire
• Abatement - Adjust the amount owed

Payment Agreement

There are numerous methods for arranging payment of delinquent tax liability, ranging from payment in full to structuring a long-term payment plan. If you have the ability and financial means to make immediate payment for a tax liability, the primary benefit is that you will avoid any future accretion of interest and fees, which will increase the future amount necessary to pay. Payment will also avoid any future enforcement actions by the IRS, including levy, lien, or other collection harassment.

If you are unable to come up with a lump-sum payment for resolution of your tax debt, the IRS allows "structuring" five primary types of payment plans, or Installment Agreements: Guaranteed Installment Agreements, Streamlined Installment Agreements, In-Business Trust Fund Agreements, Long-Term Installment Agreements, and Installment Agreements on Specified Balance Due Accounts. We will work within your budget to create a payment plan which pays off your taxes in the shortest amount of time that your financial situation can accommodate.

If you would like to discuss any of your Installment Agreement options, please give one of our Tax Specialists a call at 888.243.7888