Offer in Compromise
Is your tax debt so substantial you don’t think you’ll ever pay it off? You might be eligible for an Offer in Compromise. The IRS’ Offer in Compromise program allows taxpayers to settle their debt by paying less than they owe.
Not everyone will qualify for an Offer in Compromise settlement. Few offers go through, so take caution when filing an Offer in Compromise. Before you file, it’s best to seek out the help and guidance from a tax resolution firm. Platinum Tax Defenders can assess your situation and file an Offer in Compromise if they determine you qualify.
Our tax resolution experts will determine if an Offer in Compromise is the best solution for your debt relief. We can also help you determine if you qualify for an Offer in Compromise.
HOW DOES AN OFFER IN COMPROMISE WORK?
The IRS will typically accept an OIC when it appears unlikely that the taxpayer can pay the full amount owed.
Here is how negotiating an Offer in Compromise typically works:
- Prove that you don’t have the financial means to pay off your tax debt within the statute period (120 months)
- Offer to pay the maximum amount you can afford. The IRS determines the amount you can afford by calculating your monthly disposable income and reasonable collection potential.
- The IRS may agree that your offer amount is the most it could realistically collect from you. If so, the IRS will accept the compromise and lower your tax debt to the amount you can pay.
- The agreed upon amount is paid in one lump sum to settle your tax debt.
When considering the taxpayer’s offer in compromise request, the IRS will consider these four factors:
- Ability to pay
- Expenses and financial obligations
- Value of your assets
To qualify, taxpayers must be current in their tax filing and payment requirements and cannot be filing for bankruptcy.
WHEN WILL THE IRS BE LEGALLY OBLIGATED TO ACCEPT AN OFFER IN COMPROMISE?
The IRS may be legally obligated to accept an Offer in Compromise based on one of the following reasons:
- Doubt as to liability: This is when the IRS doubts that your tax bill is legally correct. Doubt as to liability can happen if you, your accountant, or the IRS makes a mistake on your tax returns. The OIC would allow you to submit a new tax return with the correct information. As a result, you’d owe a lesser amount.
- Doubt as to Collectability: Doubt as to Collectability exists when the taxpayer’s assets and income are less than the full amount owed.
- Effective Tax Administration: In this case, there is no doubt that the tax is correct and should be collected. However, an extreme or exceptional circumstance exists that allows the IRS to consider a taxpayer’s OIC. To qualify, the taxpayer would have to demonstrate that paying the tax would create an economic hardship.
HOW DO I KNOW IF I QUALIFY FOR AN OFFER IN COMPROMISE?
If you can’t pay your tax debt, ask a professional to see if an OIC is the right solution for you. You should see a professional if you don’t have assets, you’re living modestly, and struggling to pay your bills each month. If you qualify for an OIC, you can save thousands in tax debt. But not everyone will be eligible. Only taxpayers who have limited income and have depleted their assets typically qualify. The qualification guidelines are strict, so it’s beneficial to consult a tax resolution professional at Platinum Tax Defenders. We can determine over the phone whether an OIC makes sense for you.
WHAT TO EXPECT FROM YOUR OIC SETTLEMENT
The IRS has a specific formula they use to determine the settlement value of an Offer in Compromise. The IRS also has a particular way of determining whether they will accept or reject your OIC. Your chances of your OIC getting accepted are determined by how well you fit into the formula.
The OIC formula works like the following:
- The IRS determines how much they think you can realistically pay them each month in an installment agreement.
- Next, they collect and add up your monthly living expenses.
- Then, the IRS puts a value on your cash flow (your income minus your allowable living expenses).
The IRS will typically give you a discount on your total settlement offer if you can pay it off sooner. The tax relief professionals at Platinum Tax Defenders can determine the likelihood of having a settlement offer accepted. Platinum Tax Defenders can also negotiate the offer on your behalf.
WHAT HAPPENS WHEN THE IRS ACCEPTS YOUR OIC
The IRS allows your Offer in Compromise – now what do you do? It’s time for you to celebrate with the tax relief professional who helped you achieve this settlement agreement. But before you do that, here’s what to expect from your Offer in Compromise offer.
Once you’ve received notice that your OIC was accepted:
- You must make sure you pay the offer amount according to the terms of your acceptance agreement.
- If you have any outstanding tax refunds, the IRS will keep it. You won’t be able to designate the return to be applied to future estimated tax payment. (Note: this condition does not apply to those who received an accepted OIC offer because of Doubt as Liability.)
- Once you approve your proposal, you will waive your right to challenge the amount you agreed to pay back legally. Therefore, enlisting the help of an experienced tax resolution professional to help you determine your settlement agreement is essential.
- You might have a bank levy or seizure of your property already filed against you. If so, the IRS will release it when they’ve received your debt payment.
HOW DO I INCREASE MY CHANCES TO BE APPROVED FOR AN OIC?
To determine if you qualify for an Offer in Compromise, seek out the help of a tax relief professional. Platinum Tax Defenders will advise you on how to get the most tax savings. Tax professionals can also ensure you submit the proper documentation to increase your chances of being accepted.
Allow yourself the best opportunity to resolve your tax liability. Call today to see if one of our tax professionals can qualify you for an Offer in Compromise. Our professional staff has years of experience in preparing, submitting and settling these cases. When you call one of our tax professionals, we guarantee we’ll answer any questions you may have. We’ll provide you with the best, most thorough assessment of your situation.
THINGS TO KNOW: THE IRS’ FRESH START PROGRAM
For taxpayers who owe the IRS a substantial amount of money, there’s an option to get it paid in full. It’s called the IRS Fresh Start Program, and it can prevent you from going into more debt.
The Fresh Start Program allows taxpayers to pay off substantial tax debts affordably for six years. Payments are made each month based on the taxpayer’s current income and value of their liquid assets. With this program, the taxpayer’s total tax debts should be paid off in full by the end of six years.
If you owe the IRS $50,000 or less in tax debt, you can apply for the Fresh Start Program. This program is available to both individuals and business owners. There are three payment options in the Fresh Start Program:
- The first option is called an extended installment agreement. An extended installment agreement is for those who owe $50,000 or less in taxes. It grants taxpayers six years to pay off what they owe without adding penalties and interest charges.
- The second option is an Offer in Compromise, which we’ve discussed above.
- The third option is called a tax lien withdrawal. This option is available to taxpayers who agree to pay off the entirety of their debt through direct debit repayment. With immediate debit payments, the amount owed is directly taken out of your account every month.
You might be unsure of which payment program might be right for you. Or you might be uncertain if you qualify for the IRS Fresh Star Program. If that’s you, contact the professionals at Platinum Tax Defenders today.
IMPORTANT ADVICE: DON’T TRY AND DIY YOUR OIC
Many Americans can and will file their tax returns on their own every year. However, when making an Offer in Compromise, do not use the “do it yourself” method. Always seek out the advice of an experienced tax resolution professional when attempting to negotiate with the IRS.
An IRS Offer in Compromise examiner is trained to look out for the best interests of the government, not the taxpayers. The IRS is very skilled at pressuring taxpayers. It’s beneficial to have an experienced tax resolution professional who regularly deals with the IRS on your side. At Platinum Tax Defenders, we protect your rights as a taxpayer and will get you the best resolution possible. The IRS isn’t going to make it easy for you to wipe out a large portion of your tax debt. IRS agents collect taxes by law. Platinum Tax Defenders protects your rights and your financial freedom.
Platinum Tax Defenders
WHO WE ARE
Platinum Tax Defenders is a full-service tax resolution firm in Los Angeles that has been helping taxpayers resolve their IRS and State tax issues since 2011. Our team of tax attorneys, accountants, and enrolled agents have a combined more than 90 years of experience in the financial services industry. Our team is ready to provide tax relief services to clients facing wage garnishments, bank levies, liens, and other challenges.
WHAT WE DO
Platinum Tax Defenders is a full-service tax resolution firm that includes a tax attorney, IRS enrolled agents, and certified public accountants specializing in providing tax relief services for taxpayers facing IRS or State tax debt. We work with the IRS on your behalf to come up with reasonable payment options and settlements. Our tax professionals are knowledgeable and experts in tax negotiations. The consequences for unpaid taxes vary by each individual taxpayer’s situation. But unpaid tax debt can lead to wage garnishment, property liens, and bank account levies.
Platinum Tax Defenders will help you reach a tax resolution plan before it’s too late. We offer fast response protection to our clients and a commitment to gaining major tax reductions. Whether this is your first time facing a tax problem, or you have previously hired a tax relief firm in Los Angeles to resolve your tax debt, we have a track record of consistently garnering IRS settlements for our clients.
WHY TRUST US
At Platinum Tax Defenders, we’ve developed an impeccable reputation for doing what’s best for our clients, 100 percent of the time. We are honest and upfront with you about your tax debt situation, and the type of tax resolution services we can provide. Each individual tax situation is different, and we’ll do whatever we can to negotiate with the IRS to help you reach a tax relief plan that works for you. We are experts in our field and work diligently to resolve the specific tax issues that each of our clients face. Platinum Tax Defenders offers fair and honest tax resolution services, and you can count on us to operate professionally and legally.
Many tax relief services in Los Angeles tend to make promises that are unrealistic. You can count on us to always be honest and upfront about your financial situation, and what type of tax resolution results you should expect.