where they do not have the money to pay off their debt in full or where paying off the debt would leave them facing hardship financially.
When it comes to tax debts, there are many people who find themselves in a situation
This has become increasingly common in the challenging financial climate that has hit countries all around the world over recent years, and many have found that they have had to decide between setting debts such as taxes or being able to pay rent and bills to keep a roof over their heads.
What Factors Are Considered In an Offer In Compromise? An offer in compromise is a solution that may be offered to some people in this situation, and this is where you can settle the debt with the tax office for less than the total amount that you owe.
When you make an offer in compromise to the tax office they will assess it and determine whether this is likely to be the most they can collect from you realistically based on factors such as your income, outgoings and general financial situation.
If you want to consider using this as a solution to help with your tax liabilities, you must ensure that you are fully up to date with your tax filing. You must also not be going through bankruptcy. In order to get assistance when it comes to making an offer in compromise you can use the services of a specialist tax accountant, who can talk you through the process step by step.
How Do I Do an Offer In Compromise?
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.
Steps to Do an Offer In Compromise
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.
How To Pay For Your Offer in Composition Settlement
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.
Can I Appeal a Rejected Offer In Compromise?
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.
If you find yourself in a situation where you are struggling to make your tax payments and you need to look at a solution such as an offer in compromise, you need to ensure you know what steps to take and what you need to do. This includes making sure you know where you have to post your forms and offer once you have completed all of the necessary paperwork.
Guide to Mailing an Offer In Compromise
The IRS website contains guides on dealing with your offer in compromise, providing details of all of the forms you will need to complete as well as the application fee that you will need to pay when you make your offer in compromise. It is important to read through this guide thoroughly, as it will explain in detail what is involved in the process, what you need to do, what the next course of action will be, and which IRS office you need to deal with in regards to your offer in compromise.
The address to which you mail your offer in compromise will depend on the state or area in which you live. According to the current guidelines from the IRS, the mailing details for the different states are as follows:
States: AK, AL, AR, AZ, CO, FL, GA, HI, ID, KY, LA, MS, MT, NC, NM, NV, OK, OR, SC, TN, TX, UT, WA, WI, WY
Memphis IRS Center COIC Unit
P.O. Box 30803
AMC Memphis, TN 38130-0803
States: CA, CT, DE, IA, IL, IN, KS, MA, MD, ME, MI, MN, MO, ND, NE, NH, NJ, NY, OH, PA, RI, SD, VT, VA, WV; DC, PR, or a foreign address
Brookhaven IRS Center COIC Unit
P.O. Box 9007
Holtsville, NY 11742-9007
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