All About The IRS OIC

An Offer in Compromise is commonly known as an IRS OIC. When an IRS OIC is accepted, you can literally wipe out your tax debt by paying only a fraction of the total bill. To qualify for an OIC, there are strict requirements that should be satisfied. But the IRS may accept as little as 1% of the amount you owe in taxes and call it even if you pass all the requirements. There have been known situations of this in the past.

You should clearly understand that in America, taxpayers essentially have no legal rights to request or get a valid tax debt lowered by any amount, other than by paying it. The government is entirely at its discretion regarding the reduction of anybody's tax bill. Luckily, the IRS is obliged to provide a fair amount of consideration to OICs that are correctly submitted in most cases. There is a very slim chance of getting accepted. Accepted OICs are less than half of the number submitted, but luckily, your options do not end there. If your submitted OIC is rejected, you then have the choice to take it to the IRS Appeals Office for further review of your IRS issue.

There's a strict and formal process for submitting an OIC. First, you must complete the Offer in Compromise Form 656. This isn't free, and you must attach a $150 fee upon filing. If you can prove that you qualify under particular poverty guidelines, you may be exempt from this $150 fee. If you're claiming exempt status, the Form 656 booklet has an Application Fee Worksheet that must be submitted.

Undergoing the OIC process won't be easy. There will be numerous steps to take as soon as you fill out the appropriate forms. As soon as you have filed the forms, you will be requested to include financial documents proving your case. These forms may or may not be readily on hand such as pay stubs, bank records, and vehicle registration. Submitting an Offer in Compromise is a substantially time-consuming effort, so you have to assess the cost and advantages of utilizing this method to fix your IRS problem. Also, submitting such huge quantities of information to the IRS may provide them with the necessary information to more aggressively collect the debt owed to them if your OIC is rejected. Before you submit an OIC, make sure you have a substantially compelling case.

In order for you to qualify for OIC consideration, several conditions should exist. There is a concept known as doubt as to collectability that should exist. This essentially means that there must be a considerable level of doubt regarding the IRS's ability to collect the tax debt from you, either at this present time, or anywhere in the future. Whether you truly owe the tax bill or not is another qualification. If you can provide sufficient proof to question whether or not you are truly liable for the tax debt, you may qualify for an OIC. The last qualification essentially says that paying your tax debt fully would place you at an extreme economic hardship and that it would be inequitable or at the very least, unfair.

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