What is an IRS Offer in Compromise (OIC)?
An offer in compromise is an agreement between a taxpayer and the IRS to settle a tax debt for less than what a taxpayer owes. If you cannot pay the full amount owed to the IRS, but are willing to pay a fraction of the amount owed in full satisfaction of your tax debt, an offer in compromise is the right path for you. An offer in compromise is a very effective and efficient way to get a fresh start and eliminate your tax debt. This solution is one that best benefits the taxpayer as well as the IRS.
The most common offer in compromise (OIC) is a “Doubt as to Collectability Offer.” In determining whether to accept this offer in compromise, the IRS will look at your ability to pay, based on your assets, future earning potential, and current income and living expenses.
Another type of offer in compromise (OIC) is a “Doubt as to Liability Offer.” Here, the IRS does not consider your current income in deciding whether to accept the offer. Instead, a doubt as to liability offer gives a taxpayer an opportunity to settle tax debt for a fraction of what is owed if the taxpayer has reason to believe he or she does not in fact owe the amount that the IRS claims he owes. Doubt as to liability offers are not available to taxpayers who have already litigated their tax debt in court.
The last type of offer in compromise (OIC) is an “Effective Tax Administration Offer.” In these offers, the IRS will consider all facts and circumstances in determining whether to accept the offer. These offers are available for taxpayers who don’t dispute that the tax debt is owed to the IRS but instead face exceptional circumstances which effects their ability to pay the debt.
CASE STUDY
Our retired client came to us in desperate need of assistance after she was notified that she had a $35,000 tax bill. To make matters worse, her only source of income was her social security and some retirement pension payments, and these she was told would soon be under garnishment for the back taxes. Understandably, this stressful situation was weighing heavily on our client because she deeply relied on her modest income to pay for her basic living expenses, which were now under threat.
Our plan was not only to stop the garnishment efforts, but also to reduce the tax bill, which with some experienced give and take we were successful in doing. We were able to negotiate an offer in compromise and slash the back taxes owed down to a mere $1000, a far better and more manageable bill.
Is an Offer in Compromise the right solution?
While the offer in compromise (OIC) program is a very popular way for taxpayers to settle their tax debt with the IRS, it is not right for everybody. There is no “one size fits all” offer in compromise package and determining whether an OIC is the right settlement approach requires a case-by-base determination of the facts and circumstances of the taxpayer.
***IMPORTANT NOTE*** Beware of tax resolution companies who advertise and promise to settle your tax debt for “pennies on the dollar.” While some OIC cases can settle for a significant discount, a proper analysis must be made to determine the proper offer amount. Many of these tax resolution companies do not employ any tax attorneys and are not trained in understanding and dealing with the tax laws and simply provide empty promises. Many of these companies have significant consumer complaints and some have been forced to close down.
Dallo Law Group is trained and experienced in the offer in compromise (OIC) area and can provide significant results in settling your tax debt. Contact Dallo Law Group to schedule a free consultation so we can determine whether an OIC is the right vehicle for your tax dispute.
Contact us to schedule a free consultation we can determine if an offer is the right solution for your case.
How much should we offer the IRS?
Determining the right offer amount depends on both the individual facts and circumstances of each case as well as the type of offer submitted. Contact Dallo Law Group to schedule a free consultation so that we can determine the proper offer amount for to maximize the probability of acceptance by the IRS. The ‘reasonable collection potential’ in some cases is less than the amount of taxes owed, and sometimes even far less.
What other IRS tax debt settlements are available?
There are several tax debt settlement options that may be available for you. Even if you may not qualify for an offer in compromise (OIC) or if we determine that an offer is not the best option to settle your tax debt, you may still qualify for an installment agreement or currently not collectable status.
Contact Dallo Law Group to schedule a free consultation to determine which tax settlement option is right for you!
How can a San Diego Tax Attorney at Dallo Law Group help with my OIC?
Dallo Law Group practices exclusively in the area of tax controversy and IRS collection matters, including offers in compromise (OIC) are a significant portion of your tax practice. Offers in compromise are often very difficult to achieve. We have the experience, knowledge, and technical know-how to produce the best settlement results for you. Although it may take months to hear back from the IRS, we will guide you through every step of the process and ensure that the IRS ceases all collection activities while the offer is pending. Keep in mind, if the IRS rejects an offer, the taxpayer will be notified why and can then file a new offer or appeal the denial with the appeals division.
Unlike many of the nationwide tax resolution companies who advertise on the television and the radio, our local reputation and your satisfaction are of the highest importance to our firm. We will never collect any fees for an offer in compromise package unless we are confident we can win. For this reason, every offer in compromise (OIC) requires a thorough tax analysis to determine whether and how the offer in compromise (OIC) is right for you.
IRS OFFER IN COMPROMISE
If we believe that an offer in compromise is an appropriate vehicle to settle your tax debt, the next step is the preparation of an offer package. Because we are educated and experienced in navigating through the tax laws and the IRS employee handbook, Dallo Law Group can competently prepare the best offer package for you and maximize the chances of IRS approval.
After the offer in compromise (OIC) is submitted to the IRS, it tends to take between four and six months to hear from the IRS. After the IRS contacts us regarding your offer, we will zealously negotiate with the IRS for the best possible offer. Unlike accountants and other so-called “tax professionals,” the attorneys of Dallo Law Group are trained in the area of tax negotiation and will put our 10+ years of tax experience to work for you!
The entire offer in compromise (OIC) process will likely take between six and eight months. During that time, we will ensure that all collection activities (including wage garnishments and levies) of the IRS cease so that you can rest assured that your hard earned assets will be protected during that time. After your offer is accepted, you will have up to 2 years to pay the tax settlement.