This Is How You Get Offer In Compromise Accepted.
What is Offer In compromise. Offer in Compromise is a program by Internal Revenue Service under 26 U.S.C , § 7122 which allows qualified individuals with an unpaid tax debt to settle down to an amount that is less than the total owed to clear the debt. Form 656 is used for the checklist to determine if the taxpayer is eligible for the offer in compromise program. The objective of the OIC program is to accept a compromise when acceptance is in the best interests of both the taxpayer and the government and promotes voluntary compliance with all future payment and filing requirements. Here are the tips to get IRS offer in compromise accepted: Check Eligibility The formula to check offer in compromise eligibility is: You will take the total debt your client owes, minus total assets (reduce your home value by 20%). Take the monthly available income times the months left in the Statute of Limitations (10 years after your assessment date). If this total is less than the total debt your client owes to the IRS less the assets, your client may qualify for an Offer in Compromise. Your offer amount will be 12 times the monthly available income. However, qualifying for an OIC does not mean your client will get an OIC. To obtain an OIC, your client must be able to pay the offer amount, which is the computed amount required to be paid to the IRS to settle the debt. Pre Checks before submitting the application Your client’s OIC application will go through a strict financial investigation. The IRS will evaluate your income, assets, expenses, and future earning potential. They will even find out if there is any possibility that the taxpayer could pay off the whole debt in future. To avoid any discrepancies and rejection of application please follow the checklist below. 1: Before submitting the offer, please make sure that your client’s all tax returns have been filed. All the programs including the OIC are restricted to people who actually filed returns. 2: There should not be any open bankruptcy proceedings against your client. 3: Double check all the number you fill in the forms. Every number you put on the form needs to be supported and these supporting documents must accompany the forms. The IRS requires 3 months of documentation. Your offer will get rejected if you don’t do it correctly. It is better to be extra cautious before submitting than to get the offer rejected and start the settlement process again with new application fee and down payment. Submit your offer Here are the steps to submit offer in compromise: You'll find step-by-step instructions and all the forms for submitting an offer in the Offer in Compromise Booklet, Form 656-B (PDF). 1: Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms; 2: Form 656(s) - individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656; 3: $186 application fee (non-refundable); and 4: Initial payment (non-refundable) for each Form 656. Negotiating with IRS Agent 1: Although OIC applications can be submitted through the mail, but if you want to discuss some points with the IRS agent, you will have to call the agent and review the form with them as well. Being a tax professional you can submit the application over phone and respond to the queries of IRS agent at the same time. 2: As an experienced tax advisor you will know that the IRS trains their offer examiners to look out for the best interests of the government. The IRS is very good at pressuring. Your job is to not get intimidated and deal with these tactics confidently. Give your client best of your service and protect their rights. 3: You need to give IRS a good reason why you believe your client will not be able to pay off the entire balance. Not any and every reason is going to work. They are trained to evaluate claims considering future possibilities. Disability, substance abuse problems, huge balance amounts, dependent care, limited income potential as a result of advanced age, or serious health matters are considered to be as good reasons. During application review While the IRS reviews OIC application, make sure your client does not accumulate more tax debt. Keep paying the tax amount and don’t wait for an approval or rejection of your OIC. IRS takes it negatively if you add more tax debt while waiting for results of your application. If offer gets rejected If the offer is rejected, it does not end all the possibilities of you getting OIC. You can apply again following the below points: 1: You may appeal a rejection within 30 days using Request for Appeal of Offer in Compromise, Form 13711 (PDF). 2: The online self-help tool may provide additional assistance on appealing your rejected offer. 3: Your letter should address the issues raised in the OIC rejection with a supporting document. If the offer gets accepted this time, you will have the opportunity to renegotiate their rejected offer under more acceptable terms for the IRS. If you don’t hear back from the IRS within 2 years after submitting an offer, your client’s OIC will be automatically accepted. For better and fast services you can use Tax resolution software, which will do most of the calculation and analysis for you so that you can concentrate on offer submission and negotiation process. Reference: https://www.irs.gov/individuals/offer-in-compromise-1https://en.wikipedia.org/wiki/Offer_in_compromise