What Are The Known as Offers In Compromise?

Offer in Compromise


1.    Before a taxpayer can be entitled for such offers in compromise, there should first be a guarantee that the figures declared in the tax returns filed are accurate and true. In addition, there should be an assurance that there is the possibility that the entire tax debt will be collected by the Internal Revenue Service (IRS) from the taxpayer. When everything else proves otherwise, then the taxpayer might not be qualified to avail of such offers in compromise. A good example of this would be when the taxpayer makes the request for such offer but then the IRS finds out that such individual has the capacity to pay his tax debts, then any offer previously granted may at any time be revoked.



2.    Basically, the offers in compromise boil down to reaching an agreement between the problematic tax payer and the Internal Revenue Service. What happens is that the taxpayer ends up reducing his tax debts for an amount lesser than the original amount of debts incurred. But then, do take note that an offer in compromise cannot be given if the IRS discovers that the total amount of debts can actually be easily paid through a payment program workable for the taxpayer.



3. A taxpayer should avail of this tax debt strategy if he can offer an amount commensurate or more than the RCP or what is commonly known as the reasonable collection potential. Should the taxpayer offer to disburse an amount that is less than what is reasonable for the IRS to collect, then rest assured that the Internal Revenue Services will not honor such amount. This RCP is essentially the IRS’ gauge the taxpayer’s capacity to pay. In line with this, the IRS will likewise include taking note of the taxpayer’s properties such as his assets, personal vehicles, bank accounts, and other real estate properties.



4. Last but not least, every taxpayer who is aspiring to obtain such offers in compromise will need to submit one to the IRS. When making an offer, the taxpayer will need to pay the IRS an application fee of about $150 and at the same time tendering a deposit wherein the amount is commensurate to 20% of the entire offer as stated in the OIC. The fees are non-refundable and it will take about six months to one year before the Offer in Compromise may finally get accepted. Acceptance of such offers will confirm that the taxpayer is given an extended time to pay off all tax debts. But then it is very vital that taxpayers availing of such OICs must be aware of all the filing as well as payment cut-off or closing dates for the next five years to come.



For these, it all the more becomes central that the taxpayers should carry out a thorough analysis of their financial capabilities so that eligibility for such offers of compromise may be obtained. Although they may not be sufficient to lower your tax debts, such technique of offers in compromise can be a really good step to achieving the solution to tax troubles

offer in compromise guidelines