Offer In Compromise

An offer in compromise may be the right option, and we do have success applying for our clients, if in fact they meet the criteria for an offer in compromise. This option is only advisable after fact finding and discovery is done. An offer in compromise consists of a lump sum payment made to the IRS if you are eligible, and if they agree to the amount of the offer. Clients will have a conditional timeline and criteria, which if not met will revert to the previously owed or originally owed amount.

Offer In Compromise – Reply On Time

If the offer is rejected by the IRS they will counter offer and you will have a time sensitive window to reply. Offers and counteroffers usually include a lump sum payment or a sequence of payments over a period of months all to be determined after applying.

Unlike a normal IRS payment plan known as an Installment Agreement, if the IRS accepts the OIC and the taxpayer pays as agreed, the IRS will forgive the rest of the taxpayer’s debt.

How Much of an Amount will the IRS Compromise?

The offer in compromise amount varies, but as the IRS states on their website: “We generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time.” That statement can be interpreted in several ways. In our experience, we have seen offers accepted as low as 10% and offers that wouldn’t even be stated as offers at 100% the full tax liability in which case, we would advise our clients to seek an affordable Installment Agreement, or CNC Status.

The IRS also Clearly States on their Website Verbatim

The IRS will figure the correct offer amount. If it is more than what you offered, and you have no special circumstances, the IRS will give you an opportunity to increase your offer amount. If you do not, the offer will be rejected. If the IRS finds you can full pay the liability, you can request an installment agreement.

If the Offer In Compromise is Not an Affordable or Eligible Option?

When you hire Tax Service Masters to represent you in seeking an offer in compromise and the amount offered by the IRS is not lower than expected or satisfactory, then what? We will at fractional cost seek the next best option which may be either applying for Currently Not Collectible status or an Installment Agreement that usually involves a lower monthly payment.

Can an Offer In Compromise Be Guaranteed?

No, no entity, enrolled agent, tax attorney, CPA, or salesman can guarantee that the IRS is going to approve an offer in compromise for less than the full amount owed. We will put forth the best efforts, and find an alternate solution if an OIC is out of the picture.

How Does Tax Service Masters Represent Clients Seeking OIC Eligibility?

If a person owes money to the Internal Revenue Service (IRS) but cannot afford to pay the full debt, it is our obligation as your representative to present your financials to the IRS and prove your hardship. By use of modern technology we send out a client questionnaire link that asks for your current financials. This is known as “Financial Disclosure”. The questionnaire allows you to enter financials at your pace and save progress as you enter information. We then simply convert the information into required IRS forms, receive your electronic signature and overnight the documents.

How Long Does It Take for the IRS to Decide?

In our experience the IRS decision letter is sent to us and our client on average 60 days from the time we overnight supporting documentation. Before choosing to move forward with this option know that some cases can take over 6 months to be resolved (this is common). Afterall an OIC involves a high dollar amount that we’re attempting to remove from your IRS account.

How to Prepare for an Offer In Compromise?

We take pre-emptive steps to lessen rejection and prolonging a decision letter which is ultimately the goal. When you hire Tax Service Masters, we’ll conduct a fact finding, and discovery. If we uncover undisclosed tax issues (such as unfiled years) we will advise corrective actions before proceeding with an offer in compromise.

Resources:

https://www.irs.gov/businesses/small-businesses-self-employed/offer-in-compromise-faqs

https://www.irs.gov/pub/irs-pdf/f656b.pdf