If you have received a tax bill or have past due taxes that you've had problems paying, an Offer in Compromise - otherwise known as an OIC - may be a viable option for tax relief. Although the IRS is particular about why you're asking for an OIC, there are three legitimate reasons to file this request for tax relief.
- Compromise (def): An agreement in which neither party got what they wanted.
If you have received a tax bill or have past due taxes that you've had problems paying, an Offer in Compromise - otherwise known as an OIC - may be a viable option for tax relief. Although the IRS is particular about why you're asking for an OIC, there are three legitimate reasons to file this request for tax relief:
With an Offer in Compromise, you agree to pay a certain amount of the tax bill. If the IRS believes that you may never be able to pay the full tax debt - even if you sold all of your assets - they may accept your Offer or give you another Offer. Tax relief is given after the offered amount is paid in full; the rest of the debt is written off.
For instance, if you owe $30,000 in taxes and fall under doubt of liability, doubt of collectability, or effective tax administration, the IRS may consider a tax relief claim of an Offer in Compromise. You might offer to pay $15,000 in two years with a $3,000 down payment. Here, the IRS may either agree or give a counter Offer. Once the Offer in Compromise is agreed upon, all collection actions cease.
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Navigating Tax Relief through an Offer in Compromise
An Offer in Compromise (OIC) is a powerful tool for taxpayers seeking relief from overwhelming tax debts. This agreement with the Internal Revenue Service (IRS) allows individuals to settle their tax liabilities for less than the full amount owed, potentially unlocking significant financial savings. Understanding the intricacies of an OIC and determining eligibility can be the key to reducing tax burdens and achieving fiscal stability.
