Unfortunately, financial struggles are something that many Americans experience. Among the various things we struggle with are paying outstanding back taxes.
If you are feeling overwhelmed by tax problems from the IRS, you want to consider an Offer in Compromise (OIC). This is a petition to the IRS to lower the amount of tax debt that you owe.
It’s a tax resolution that can ease your financial burden. If you qualify, you will owe less money to the IRS and will have more time to pay it off.
Here’s how you can get an IRS Offer in Compromise and the process to pay:
To qualify for an OIC, you have to meet one of 3 situations:
The first is doubt as to liability. This requires you to prove that you feel that you shouldn’t owe anything or that the amount requested should be less. This is a dispute that you have to prove.
The second option is doubt as to collectability. This means that your assets and income are insufficient to pay your tax debt. You have to prove that you will not have the funds to make the payment.
Finally, you can request an effective tax administration. This states that you can pay the full amount but doing so will cause extreme financial hardship for you.
You want to find an IRS tax attorney to help you state your case for qualifying.
If you qualify, there are two ways that you can make your payment. First, you are required to pay a $186 fee with your application. This fee is non-refundable even if you don’t get approved. Your attorney can help you waive this fee if you qualify for doubt as to liability.
The first payment option is through a lump sum. This requires you to pay 20% of your amount upfront. The remaining amount has to be paid within 5 months in no more than 5 installments.
The second option is the periodic payment plan. This means that you have to make an offer of how much you can pay each month. You have to send the first payment with your offer. You have to keep sending an amount each month while the IRS reviews your case. If you miss a single payment, your case will get rejected without appeal. You have between 6 to 24 months to pay off your balance.
Your attorney will look at your finances to help you determine what’s the best route to take. You want to make sure you set an amount each month to make regular payments.
Don’t Neglect Payments
If you qualify for an OIC, make sure you don’t neglect a single payment. If you do, your offer will get rejected.
You’ll continue to owe your initial amount plus high penalty fees. It’s imperative that you start planning ahead on how to get the money to pay the tax balance.
Get Your Offer in Compromise
Now you know the benefits of getting an Offer in Compromise from the IRS. If you feel that you cannot pay your tax debt, make sure you try to apply for an OIC as fast as possible. Plan ahead to ensure you don’t get yourself into more hassles with the IRS!
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