How To Complete An Offer In Compromise
Often there are circumstances that arise when a taxpayer has accumulated a substantial tax liability that clearly exceeds any ability to pay in a lump sum. In this situation, the taxpayer should consider hiring an Offer in Compromise attorney to handle the negotiations with the IRS.
The IRS applies the same collection standards utilized in installment agreements to offers in compromises. They will allocate an amount for clothing, food, housing related costs, vehicle transportation, and medical or dental costs. They will also consider any legal cash commitments like student loans, alimony and child support. Ultimately, based on this analysis, the IRS determines whether it is possible to grant relief under an offer in compromise.
When an OIC is submitted, the IRS will verify that it can process the offer. The offer will be processed if the taxpayer has: (1) paid the $150 application fee; (2) filed all back tax returns; (3) is not actively involved in a bankruptcy proceeding; and (4) not been involved in an on-going audit.
During the verification stage of the IRS offer in compromise, the IRS examines all of the financial information that was provided by the taxpayer in the application. Supporting documentation is reviewed and the financial claims (income, property ownership, etc) are analyzed. If the IRS needs additional information they will generate an Offer Verification Letter that will be submitted to the taxpayer. This letter requests the necessary documentation that the IRS needs to further process the return.
During the verification process, the IRS reviews the financial information provided by the individual. All documentation is analyzed and property ownership, income, expenses and other items are verified. If the IRS requires more documentation they will mail an Offer Verification Letter to the individual. This letter should be reviewed in detail by the taxpayer’s offer in compromise attorney.
Make sure that you cooperate fully with the IRS and provide any necessary documentation with a quick turnaround. In addition, make sure that you keep all of you tax filings current and pay any required estimated taxes by the due date.
Hiring an offer in compromise attorney can help you improve the chance that your offer will get accepted. At a minimum they can review your situation and provide you valuable information that will allow you to make an informed decision.
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