Tax season is beginning to wrap up and many of our clients want to know if they qualify for an Offer in Compromise. An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that will settle the taxpayer’s tax liability for less than the full amount that is owed. Now that most taxpayers have filed/are in the process of filing taxes, it’s a great time to talk about qualifications for an OIC.
Why Would the IRS Accept an OIC?
According to the IRS, an OIC may be accepted based on the following:
- “First, the IRS can accept a compromise if there is doubt as to liability. A compromise meets this criterion only when there’s a genuine dispute as to the existence or amount of the correct tax debt under the law.”
- “Second, the IRS can accept a compromise if there is doubt that the amount owed is fully collectible. Doubt as to collectibility exists in any case where the taxpayer’s assets and income are less than the full amount of the tax liability.”
- “Third, the IRS can accept a compromise based on effective tax administration. An offer may be accepted based on effective tax administration when there is no doubt that the tax is legally owed and that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.”
For more information from the IRS, visit their website here.
What Do I Do Next?
If you meet the above criteria, your next step is to reach out to the professionals here at Reliance Tax Group. We will go over all the necessary information to further determine if you qualify for an OIC. You can count on us to make sure all of the documentation is correct and accurate before we send your OIC off to the IRS.
Call us today at (720)452-2915 to get started!