As per a survey conducted by LendEDU, nearly 40% of the American population have been through or are experiencing the collection of tax debts through fines, interest charges, and so on.
For taxpayers who are exhausted by enormous IRS debt, an Offer in Compromise (OIC) may sound like a great solution. It is a program through which the government allows certain individuals to liquidate their tax debt for a sum that is less than what was owed completely, thus giving them a chance to make a new financial start.
According to offer in compromise lawyer Angie Smith, Esq, OIC has numerous qualifications and requirements. Keep in mind that filing your application does not guarantee your success in the OIC program.
Let’s evaluate the advantages and disadvantages of the situation so as to determine whether it is really worth your while to file an offer in compromise or not.
If you ever get overwhelmed with tax debt, an Offer in Compromise (OIC) may be a solution that you want to check into. It allows you to pay the tax bill for less than you owe and get a fresh start.
You are not alone with the stress of taxes. The same difficulties were experienced by a considerable number of people living near you. It is necessary to demonstrate that full payment would indeed be a financial burden if you want to get an OIC.
The entire procedure could be very scary, but knowing it could give you the confidence to proceed with the process. The IRS takes into account your income, expenses, and asset value to determine your eligibility. By thinking of engaging in an Offer in Compromise (OIC), you are taking the necessary steps to effectively reduce your tax burden.
Submitting an Offer in Compromise can be a major relief for taxpayers who are having a hard time with their huge tax debts. The Offer in Compromise somehow reduces tax debts by facilitating the payment of a partial amount, which can lessen one’s financial burden.
By submitting an Offer in Compromise, you are effectively addressing your tax problem and gaining the upper hand in managing your financial situation. Many are comforted in being part of the solution that has assisted countless others in similar positions.
A successful offer in compromise technically stops all IRS collection actions, giving you all the time you need to resolve your financial issues.
An offer in compromise is good for a taxpayer, but they must weigh its drawbacks first. To begin with, the whole procedure is a bit difficult and intimidating. There is a lot of financial documentation to provide, and a rejected offer means more stress.
Accepting a compromise could potentially harm your credit rating and create additional challenges for you. If your finances improve shortly afterward, you could become responsible for the balance of the taxes.
If you don’t qualify, this option may not be available.
There are various requirements when it comes to an Offer in Compromise. You first have to owe $5,000 in taxes or more, and your tax filings have to be current. You also cannot have a pending bankruptcy proceeding.
You must be able to prove that you cannot pay your full tax liability, which typically involves demonstrating that your expenses surpass your income.
The IRS can seize your bank account and property. Being aware of all this information, you will have a certain degree of confidence when it comes to deciding on the path to take if your desire is to regain control over your finances and your life in general.
It is important to know which process to follow if you qualify before applying for an offer in compromise. All relevant financial documents must be gathered, including income, expenses, and assets. The papers will be utilized to complete IRS Form 656 and either Form 433-A or Form 433-B for a business, with a focus on verifying that all information provided is entirely correct, as honesty is important.
When it comes to deciding which offer to take, choose the one that you think you'd be able to pay. Pay the application fee and send in the offer to the IRS. Be patient, as the review process can take some time.
These steps will help you feel more confident as you deal with tax debt.
