Tuesday, April 7, 2015

Offer in Compromise: Reducing What You Owe the IRS

The IRS has a tendency to sneak up on you during the most inopportune times. In many cases, the IRS will suddenly knock on your door demanding that you pay thousands of dollars in back taxes or risk having your assets frozen.

Sometimes, the money you owe the IRS is nearly impossible to pay off given your income and a variety of other factors. In such cases, consult a tax attorney and see if an Offer in Compromise (OIC) is possible.

An OIC is a tax relief solution that tells the IRS why it is virtually impossible to pay off your tax debt. In turn, the IRS will reduce your debt to a more manageable number. Afterward, you’ll have to pay the settled amount and your delinquency status is wiped clean. Then again, certain criteria must be met before you become eligible for an OIC. These include:

  • Doubt that current assessed tax is correct
  • Doubt that you’ll be able to pay the full amount
  • Severe economic hardship

Consult a tax attorney to see if you fall under these criteria. If so, there is a significant chance the IRS will accept an Offer in Compromise you turn in.

Do not delay seeing a tax attorney if you are facing tax problems. Addressing tax problems early on saves you the headache of having to deal with levies and other penalties. At the same time, immediate action shows you are sincere in paying your taxes, an approach that certainly helps during OIC negotiations.

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