How To Successfully Apply For An Offer In Compromise Agreement
- May 15, 2019
- Posted by: asal
- Category: Tax Resolution
When you owe the IRS more than $10,000 in tax debt, you might feel like you’re out of options. For those of us who can’t afford to pay back our taxes, negotiating doesn’t seem like an option. However, the IRS created debt relief programs for a reason. One of these programs is called Offer in Compromise (OIC).
An OIC is an agreement between a taxpayer and the IRS. The deal settles the taxpayer’s tax liabilities for less than the full amount owed. Platinum Tax Defenders has years of experience successfully negotiating Offer in Compromise deals. Recently, we got a client’s debt down from over $146,000 to $100. If you think an OIC might be for you, read on for tips on how to negotiate an OIC deal. Then, call Platinum Tax Defenders when you’re ready to get tax debt-free.
File All Back Taxes
Before you consider applying for an Offer in Compromise deal, make sure you settle your back taxes. Taxpayers must file all tax returns they are legally required to submit before applying for an OIC. The IRS restricts all tax resolution programs to taxpayers who filed their tax returns.
Don’t Collect Additional Tax Debt
When your Offer in Compromise is up for review, don’t collect more tax debt. If you have quarterly estimated taxes to pay, pay them. It’s not a good idea to put your previous tax payments on hold during the application process. While they’re reviewing your offer, the IRS does not favor taxpayers who are accumulating more debt. Adding on more debt than you already have could hinder an offer.
Hire A Tax Resolution Professional
One of the biggest tips for applying for an Offer in Compromise is, don’t do it alone. Many people will presume that merely filling out a form for an OIC is easy. However, it’s not that easy. The IRS trains its Revenue Officers to look out for the best interests of the government. The IRS excels at pressuring taxpayers. Because of this, it’s beneficial to have an experienced tax relief expert working with you. The tax resolution experts at Platinum Tax Defenders have years of experience dealing directly with the IRS. Tax relief experts are less intimidated and are also more familiar with the IRS’ tactics. Our team at Platinum Tax Defenders looks out for the best interests of our clients. We will protect your rights and get you the best settlement possible. Also, we know the IRS won’t make it easy, and we’re ready.
Be Truthful When Filling Out Your Application
When submitting your Offer in Compromise, make sure the numbers you’re claiming are accurate. Making sure you’re claiming accurate figures is where a tax resolution professional will come in handy. If you submit a careless settlement amount by underestimating numbers, the IRS won’t accept it. Every financial you claim on your form must have a supporting document attached to the application. Also, the IRS requires three months of documented proof of your financial situation. If you do not fill out the form correctly the first time, chances are the IRS will reject it. If the IRS rejects your application, you’ll have to start the process all over again. Starting the process all over again means an additional application fee and down payment.
Pay A Non-Refundable Payment With Your Application
When submitting an Offer in Compromise application, you must provide an initial non-refundable payment. Do not forget to send this payment. This payment and the application fee will apply directly toward your tax liability. If your debt spans multiple years, you can decide for which year the IRS uses the fees.
Provide An Accurate Estimate Of Your Assets
When applying for an Offer in Compromise, you’ll make an offer to the IRS. This offer will include the total amount you think you can realistically pay back. When determining this number, your offer amount must equal a “realizable value” of your assets and potential future income. Under its Fresh Start initiative, the IRS looks at one year to determine your projected future income. The IRs looks at one year if you can pay back your taxes in five or fewer months. If you can pay within six to 24 months, the IRS will look at two years of your income. The good news is, the IRS’ Fresh Start program has led to the acceptance of more OIC applications. It’s crucial that all the necessary steps are done correctly to ensure a positive outcome. Working with a tax resolution professional can ensure you’re putting your best foot forward.
Don’t Wait To Apply for an Offer in Compromise
When making an Offer in Compromise deal, depending on your offer, you will have to pay the tax debt soon. Soon could mean four to five months or six months to two years. However long you have to pay back the debt, don’t wait on applying. Some people want to wait to apply for an OIC until they’re in a better financial place. However, those who are struggling to pay their bills are more likely to be approved for an OIC. If you need to, borrow money from family or friends to pay back your debt. If you start making more money and your financial situation improves, the IRS can change the terms of the agreement.
Make Sure Your Reason For Filing Is Valid
Before applying for an Offer in Compromise, speak with your tax resolution professional. You will want to be able to describe in great detail your reason for applying for an OIC. The IRS isn’t going to accept any reason. If you are a business owner and you lost a couple of clients, that’s not a good reason.
Reasons that are considered by the IRS include:
- Substance abuse problems
- Large balance amounts
- Dependent care
- Limited income potential because of age
- Serious health matters
Get Help Filing For An Offer In Compromise
The tax resolution experts at Platinum Tax Defenders have experience in successfully negotiation Offer in Compromise deals for our clients. We have successfully saved our clients hundreds of thousands of dollars in tax debt. If your tax debt is more than you can comfortably afford to pay, call us today for a free consultation. Our tax resolution experts are here and ready to assist you.