The term Offer of Compromise is heard very often when people are trying to sort out their tax issues with the IRS, yet many of us are not sure about how this provision can help. An offer of compromise, as the name suggests, is a compromise with the IRS that will help you to settle and eradicate your tax obligations. The process is very simply; both the tax payer and the IRS are going for the win win solution and reach a mutually beneficial agreement.
The IRS approves application of OIC (Offer of Compromise) because as far as possible they would like to resolve the situation amicably without resorting to hard tactics; also they want to give the tax payers a chance to clear the dues with a lower amount. One of the primary factors considered when granting an OIC is the genuineness of your financial distress which has prevented you from making your tax payments. So you will need to possess all the documents that will prove beyond a doubt that you simply cannot pay the full amount that is due from your side.
When applying for an OIC, you will have to inform the IRS about an amount that you can afford to pay. Make sure that this is a reasonable estimate and that you do not default on it. Another factor to consider is that the IRS will only accept OIC applications if you have filed your tax returns and can provide them with accurate estimate of your income and expenditures even if they already have these details. So the most important tip to keep IRS troubles away is to diligently file your tax returns each year, by taking some time out to file your returns you may very well avoid a jail term that may results from an evasion of tax charge against you.
Many people wrongly assume that the only thing that the IRS considers when reviewing your OIC application is the amount that they need to pay. As opposed to this faulty belief, when reviewing your OIC application the IRS is primarily concerned about how much they can collect from you. You will need to place a very strong case in front of the IRS proving your inability to pay the complete amount, just citing financial troubles will not help, you will need to have proof on paper such as bank account records, documents stating the non payment of other debts etc. If you ant to increase your chances of getting an OIC ensure that you follow the requisites conscientiously.
When you apply for an OIC don t expect the IRS to welcome you with open arms, offer you a cup of coffee and quickly grant your request; you need to understand that through the OIC application you are requesting the IRS to forgive a part of your tax obligations and the IRS is certainly not going to be too keen on that.
However, like all human beings, the taxman will also go for something over nothing and will rather grant you an OIC instead of pushing you towards a bankruptcy. Depending on your specific situation the IRS may very well try to recover a much as they can from you while your OIC application review s pending; they may even resort to brutal tactics such as wage garnishment to et their hands on as much as they can get. However, you can appeal against such application tactics with the help of a process known as Collection Due Process Appeal.
There will be an actual hearing at the IRS office for the appeal and you will get the chance to mention an installment plan during this hearing. An OIC or an installment plan are considered to be more appropriate alternatives to enforced forms of collection. If you can prove that due to some reasons you cannot pay all your tax dues, there is a good possibility that you may be able to get away by paying a part of you tax obligations. If you would like to pursue this course of action enlist the help of a Dallas tax attorney who will be able to guide you on the proper course of actions for your specific scenario.
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