Jul 10 in Tax Resolution
The Power of an Offer in Compromise: Settling Tax Debt for Less
Hey folks,
If you’re overwhelmed by tax debt, an Offer in Compromise (OIC) might be the lifeline you need. This program allows you to settle your tax debt for less than the full amount you owe, but it’s not for everyone. Let’s dive into how it works and who qualifies.
What is an Offer in Compromise (OIC)?
An OIC is an agreement between you and the IRS that allows you to settle your tax liabilities for less than the full amount owed. The IRS considers your ability to pay, income, expenses, and asset equity when deciding whether to accept your offer.
Who Qualifies?
To qualify for an OIC, you must meet one of the following criteria:
- Doubt as to Collectibility: You cannot pay the full amount owed within the remaining statute of limitations.
- Doubt as to Liability: There is a legitimate dispute about the amount you owe.
- Effective Tax Administration: Paying the full amount would cause an economic hardship or would be unfair and inequitable.
Steps to Apply:
- Complete the Forms: Submit Form 656 (Offer in Compromise) and Form 433-A (Collection Information Statement for Wage Earners and Self-Employed) or Form 433-B (for businesses).
- Submit Fees and Initial Payment: Include a non-refundable application fee and an initial payment with your offer.
- Wait for Review: The IRS will review your application, which can take several months. During this time, continue to file all required tax returns and make any necessary payments.
Benefits:
- Debt Reduction: Settle your tax debt for a fraction of what you owe.
- Fresh Start: Clear your tax debt and avoid further collection actions from the IRS.
- Stress Relief: Gain peace of mind knowing you have a manageable plan to resolve your debt.
Example:
Suppose you owe $75,000 in back taxes, but after reviewing your financial situation, the IRS agrees to an OIC for $20,000. You make the agreed-upon payments and settle your debt for significantly less than the original amount owed.
An OIC can be a powerful tool for those who qualify, providing a way out of overwhelming tax debt. Have any of you successfully used an OIC? Let’s discuss your experiences and any advice you have for others considering this option!
2
0 comments
The Power of an Offer in Compromise: Settling Tax Debt for Less
skool.com/benchmark-iq-community-3526
This group is full of future members of Benchmark IQ's 3% club! Before you get there, this is an amazing place to begin saving on your taxes.
powered by