would be unfair and inequitable to require full payment of the tax.The primary determinant on “doubt as to collectibility” is based on a taxpayer’s personalfinancial profile; including income, expenses, and assets. The IRS sets strict guidelinesfor income, allowable expenses (categorized as: Living, Housing, Transport), andavailable equity in owned assets. An additional benefit of submitting an OIC is that IRSRestructuring Act prohibits the IRS from collecting a tax liability by levy during theperiod in which the Offer is being processed, or 30 days following rejection of an offer,or during the appeal of an OIC. This window of non-collection is frequently a respite forour clients to avoid any IRS collection actions, thereby securing additional time forclients to pay and prevents the IRS from seizing any assets in the interim.If the offer in compromise is accepted, payment can be made via one of three options: 1)cash (within up to 90 days of acceptance); 2) short-term deferred payment plan (payablewithin 24 months of acceptance); or 3) a long-term deferred payment plan (payable overthe remaining time left on the collections statute).Once the offer in compromise is accepted, the taxpayer must remain in compliance withall filing and payment obligations, including staying current with quarterly estimated taxpayments and not incurring any new tax debt, for five years or until the offer amount ispaid, whichever is longer. Failure to abide by these terms may result in the default of theoffer in compromise and the reinstatement of the original tax liability.
What if I’m making installment payments, can I still do an Offer in Compromise?
Absolutely, and in special situations the installment agreement can be suspended whilethe IRS is evaluating the Offer in Compromise.
Ok, what happens when the Internal Revenue Service accepts my Offer InCompromise?
Typically, the Offer in Compromise states your intentions as to the amount and paymentstructure; therefore, you could have up to ninety days or 2 years to tender payment to theInternal Revenue Service of the offered amount. Once the IRS has received payment,they will release all tax liens and there is no further liability.
How long does it take an Offer in Compromise to be approved by the IRS?
The Internal Revenue Service typically takes approximately six to twelve monthsdepending on caseloads. During this time, all further collection activities are suspended.
Does Penalty Abatement get my penalties and interest waived from my taxaccount?
Penalties can be removed provided you have a valid reason for falling behind. Interestcan be adjusted in the event of an error in the application of your debt or if you can