When it comes to tax debts, there are many people who find themselves in a situation

An offer in compromise could be the right solution for you if you find yourself in a situation where you cannot manage to make your full tax payments and therefore cannot settle what you owe to the tax man. If settling your full tax bill is likely to cause you financial hardship, an offer in compromise could be the right solution for you.

When it comes to making an offer in compromise there are certain steps that you have to follow. First off you need to ensure you are eligible, and you can check your eligibility via the IRS website using their Offer in Compromise Pre-qualifier. If you are eligible you then need to follow the step by step instructions in order to submit your offer. This includes completing the relevant forms as instructed on the IRS website and providing all requested supporting documentation. You will also need to pay an application fee of $186, which you need to send along with all paperwork when you submit your offer. You will also need to decide how you want to pay the amount you are offering if accepted, such as making a lump sum payment or paying in installments.

It can be quite a daunting process to arrange and submit your offer in compromise, so you may want to consider using the services of a professional accountant. This could save you a lot of time and stress, but you should ensure you use an accountant that has experience in this field and can therefore get the best outcome for you with regards to your offer.

When it comes to paying for your offer in composition (OIC) settlement, there are three different ways to approach this. The first way is a lump sum cash offer. Once you pay the $186 application fee you are then required to make a payment of 20% of the offer. Depending on how you look at it, the down or the plus side of this is that you have to pay the offer in five payments or less.

Another way is the short term periodic payment offer. Once the IRS receives the offer this plan must be paid within 24 months. Regular payments will be paid while your case is being investigated by the IRS and your first payment is due once you file Form 656. Finally, you have the deferred periodic payment offer. With this plan the first payment must be made with the Form 656 and regular payments will be made while the IRS investigates your case. This offer will be paid with the remaining statutory period.

If your offer in compromise has been rejected you do have the option to appeal. In order to appeal, you must have received a 30 day letter rejecting your offer in compromise and be a W-2 wage earner. The rejection letter will list the reasons why the offer was not accepted.

Taxpayers have 30 days to appeal a rejected offer in compromise and have two ways to do so. The first way would be to prepare a Form 13711 or a separate letter with specific information. The information in that letter would have to include your name, address, social security number and phone number where you can be best reached at. You’ll also need to include a statement that you want to appeal the IRS findings to the Appeals office along with a copy of your rejected offer letter and the tax period involved.

Next you’ll need a to create a list of the items you don’t agree with and why exactly you don’t agree with them. You can also include any additional information that you think Appeals should consider and facts supporting your position on any issues that you don’t agree with. Lastly, be sure to specify the law or authority on which you are relying and sign the written protest, stating that everything is true under the penalties of perjury.