If you owe more in taxes to the IRS than you can afford to pay, an offer in compromise is definitely worth considering. When successfully crafted, they can vastly reduce the amount of taxes owed and make a payment schedule feasible. Of course, most people don’t know how to file an offer in compromise until they really need to do so, possibly to prevent having to file bankruptcy.
The first step for filing an offer in compromise should be consulting a professional tax attorney to determine whether or not you’re eligible to file. After you have confirmed that you have a legal basis for filing, your tax attorney can help you draft an offer in compromise that follows the codes of tax laws and is likely to be accepted by the IRS. An important function of your tax attorney is navigating the vagueness of tax laws so you don’t have to-in some states, such as Utah, the only bounds upon offers in compromise is that the filer cannot be able to repay the original assessed amount within a reasonable amount of time. The amount of time is never qualified.follow this website at http://www.irstaxattorney.com/offer-in-compromise/part5-oic/OIC_frequently_asked_questions.html.
Once You Know You’re Eligible
You also need to decide if you want to try to repay the lowered amount in a single lump sum or in multiple smaller payments; both are equally legal, but one might be more feasible for you to accomplish. Your tax attorney will help you determine if the lowered tax amount is one that the IRS will consider reasonable, and not too much of a deduction.
Actually Filing an Offer in Compromise
Once you have made sure that you’re eligible to file an offer in compromise, and ensured that your expectations of the outcome are reasonable, you’re ready to actually file. You’ll need all of the information you used when filing taxes, and a list of your financial assets. Your tax attorney will need to look over all of your forms before you mail them to ensure that they are both accurate and fully completed. Failure on either plan can delay or stop the acceptance of your offer. Once you mail your offer in compromise, all you have left to do is wait. If two years go by after the mailing without the IRS issuing a response, your offer is automatically accepted and you may begin payments.
When an offer in compromise needs to be filed, it’s an extremely stressful time for all of the parties involved. By following these tips, you can increase your chance of getting the IRS to consider or accept your compromise. Make sure that you keep copies of all of the paperwork you used when filing the original offer in compromise, though. If the offer is rejected, you’ll need them, and the assistance of your tax attorney to file an appeal of the rejection and have it succeed in lowering your total amount of taxes to be repaid.