Question By: Dealing with tax debt can be overwhelming and stressful. If you owe money to the Internal Revenue Service (IRS) and are unable to pay it in full, you may be eligible for an Offer in Compromise (OIC) program. This program allows taxpayers to settle their tax debt for less than the full amount owed. However, many people wonder how receptive the IRS is to an Offer in Compromise. In this blog, we will explore this topic in detail.
First, let's understand what an Offer in Compromise is. An Offer in Compromise is an agreement between a taxpayer and the IRS that settles the taxpayer's tax liabilities for less than the full amount owed. The IRS will consider an Offer in Compromise if it believes that the taxpayer cannot pay the full amount owed, or if there is a doubt as to whether the taxpayer actually owes the full amount.
Now, coming back to the question at hand, how receptive is the IRS to an Offer in Compromise? The answer is that it depends on several factors. The IRS will evaluate an Offer in Compromise based on the taxpayer's financial situation, including income, expenses, assets, and liabilities. The IRS will also consider the taxpayer's compliance history, the type of tax owed, and the circumstances that led to the tax debt.
The IRS has specific criteria that it uses to determine whether to accept an Offer in Compromise. The IRS will only accept an Offer in Compromise if it believes that the taxpayer cannot pay the full amount owed or that accepting the Offer in Compromise is in the best interest of the government. The IRS will also consider whether the taxpayer has complied with all of their tax filing and payment obligations.
You must pay the debt within 24 months and send the first payment with your OIC application. However, the IRS will not refund the money even if it rejects the plan; it will simply put the money towards the debt you owe. Therefore, it is wise to continue to make payments while you wait for the IRS decision.
In general, the IRS is receptive to Offers in Compromise that are reasonable and based on the taxpayer's ability to pay. The IRS wants to ensure that taxpayers who are genuinely unable to pay their tax debt are not subjected to undue hardship. If the IRS believes that an Offer in Compromise is reasonable, it will work with the taxpayer to resolve the tax debt.
However, it is important to note that the IRS will not accept every Offer in Compromise that is submitted. The IRS will carefully evaluate each Offer in Compromise to determine whether it is in the best interest of the government. If the IRS believes that the taxpayer can pay the full amount owed or that accepting the Offer in Compromise would not be in the best interest of the government, it will reject the Offer in Compromise.
If you have trouble with the IRS, you must have the best legal representation for a favorable outcome. If you want to submit an Offer In Compromise, your attorney will have a higher chance of getting the application accepted. Talk to the Chicago tax lawyers at North Suburban Legal Services if you have questions.
For more details, visit https://www.nslslaw.com/how-receptive-is-the-irs-to-an-offer-in-compromise.html
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