When you owe money to the IRS in the form of back tax debt, you may have to seek the tax debt resolution that is the Offer in Compromise. The OIC guide is intended to help you navigate and better understand the process. It is by no means a comprehensive alternative to professional tax counsel. Do seek the guidance of a seasoned tax professional, and your course of action will be better suited to your specific circumstance. And then, should you proceed with an offer in compromise, your chance of acceptance will greatly improve.
- Seeking Council
Frequently Asked Questions
Is Offer in Compromise a good idea?
If you find out you owe a substantial amount of taxes and cannot afford to pay the IRS, then yes. The IRS is unforgiving when it comes to tax debts. After all, while it may appear to be a simple accident, the IRS considers it your responsibility to provide clear and accurate accounting. This is how many people wind up owing money.
An Offer in Compromise isn’t a guarantee, but it’s the best option when you owe money you simply don’t have.
How much should you offer in an Offer in Compromise?
The IRS will calculate it on your behalf. It’s essentially your net realizable equity or, if you liquidated all assets and were granted a month’s allowance (of your own income) to survive, then you can make long-term payments (possibly 24 months).
Offer in Compromises are seldom accepted, but the key to making a compelling offer is doing this calculation on their behalf. While this is severe and restrictive, it often forces people into conscientious budgeting — which isn’t the worse way to prevent this from happening again.
What is the meaning of Offer in Compromise?
It’s an agreement between the IRS and the taxpayer to settle the taxpayer’s debts.