Are you struggling to pay back taxes? Does a monthly payment plan leave you with very little to cover rent and utilities?
Some taxpayers genuinely want to eradicate tax debt yet find themselves restrained by their financial situation. Fortunately, the Internal Revenue Service (IRS) will sometimes work with taxpayers by agreeing to an Offer in Compromise (OIC).
An Offer in Compromise is a tax settlement solution that allows you to only pay back a portion of your debt. In certain situations, the IRS may forgive all your tax debt. However, that situation is rare.
In fact, most Offer in Compromise proposals get rejected. Why? Creating a proposal for an OIC is not straightforward and usually requires the assistance of a tax professional.
Levy & Associates can help remedy your tax situation by creating an OIC proposal the federal government will have difficulty denying. Contact us today for a free initial consultation.
What Is an Offer in Compromise (OIC)?
How does an Offer in Compromise work? An Offer in Compromise (OIC) is an excellent option for resolving federal tax liabilities. It essentially allows you to only have to pay back a portion (or none!) of your back taxes.
While this is an effective vehicle for resolving tax debt, the truth of OIC proposals is that very few are accepted by the IRS. We see far too many taxpayers taking the time to create an OIC only to have it rejected.
Fortunately, you can improve your odds of receiving a favorable response to your Offer in Compromise proposal by hiring a tax professional. The team at Levy & Associates has years of experience dealing with the IRS. In fact, some of our team members are former employees of the IRS.
We possess an intimate understanding of the Offer in Compromise process and will work closely with you to build a proposal that can eliminate some or all of your tax debt. Contact Levy & Associates today to learn more about Offer in Compromise agreements and whether this might be the best solution for your needs.
The yearly acceptance rate for Offer in Compromise proposals is generally less than 50 percent. Consequently, having a tax professional handle and submit the proposal usually improves your odds of acceptance.
Nonetheless, the IRS has no obligation to forgive any of your debt, which makes submitting an exceptional proposal the best way to control your future. Speak with a knowledgeable tax resolution professional at Levy & Associates today to learn more about submitting an Offer in Compromise. We’re also happy to answer other tax resolution questions about liens, levies, the IRS’ Fresh Start Program, and more.
IRS Fresh Start Program
What is the Fresh Start program with the IRS? The Fresh Start Initiative can help you get back in good standing with the IRS. The goal is to eventually eliminate all your tax debt so your life can return to normal.
The IRS expanded its Fresh Start Initiative program in 2012 in order to assist more struggling taxpayers. Thanks to the Fresh Start Initiative, the likelihood of having an Offer in Compromise proposal accepted actually improved. Acceptance rates are now higher than they were before the introduction of this program.
Keep in mind that an Offer in Compromise is not always the best way to settle tax debt. Before moving forward with the process, you should meet with a tax professional. Levy & Associates is happy to offer advice through a free consultation. We’ll walk through your unique situation and arrive at the best solution for your needs.
Ways the IRS Considers an Offer in Compromise
Levy & Associates is highly experienced at using the Offer in Compromise process, which is an excellent vehicle to resolve federal tax liabilities.
The first step in this process is to file all delinquent tax returns. This step must be completed before the IRS will even begin to consider your eligibility for an Offer in Compromise agreement. Levy & Associates will prepare all returns for you.
The IRS may legally compromise for one of the following reasons:
- Doubt as to liability
- When doubt exists that the assessed tax is correct
- Doubt as to the collectability
- When doubt exists that the taxpayer could ever pay the full amount of tax owed
- Effective tax administration
Under effective tax administration, there is no doubt that the assessed tax is correct and no doubt that the amount owed could be collected, but the taxpayer has an economic hardship or other special circumstances that allow the IRS to accept less than the total balance due.
By scheduling a meeting with Levy & Associates, you can determine your eligibility for an Offer in Compromise. From there, we’ll handle the hard work of preparing the request for the IRS.
Advantages of an Offer in Compromise
Is an Offer in Compromise a good idea? There are situations in which pursuing an OIC is your best option, while in other circumstances you may be better off considering an installment agreement.
An Offer in Compromise is the best means for reducing your financial burden, but it likely won’t forgive all of your debt. And once an OIC is rejected, you cannot submit another one—so you need to make sure your proposal is flawless.
The acceptance rate of OIC offers from the Internal Revenue Service averages around 40 percent. The average amount the IRS forgives is approximately $10,000.
There are obvious advantages of having a substantial portion of your debt eliminated, but it can take a significant amount of time and effort on your end. The entire process can take up to a year! Hiring a tax professional can take this burden off of your shoulders and prevent you from having to create the proposal by yourself. We have the knowledge and resources needed to build a strong proposal.
Contact Levy & Associates Today
How does an Offer in Compromise work? How much should you offer in an Offer in Compromise? Is the process even worth the effort?
These are just a few of the many questions that taxpayers have about the Offer in Compromise process. On top of those common questions, very few citizens know about the Fresh Start Initiative. The program, which includes the Offer in Compromise forgiveness debt solution, can help low-income families get back on track.
Levy & Associates has the answers to these questions and more. Our team of experienced tax professionals, attorneys, CPAs, and former IRS agents is prepared to guide you smoothly through the Offer in Compromise process. Contact us today to learn more—we are available for free initial consultations with absolutely no commitment on your part.