If you find yourself in a situation where you owe money to the IRS that you can’t pay in full, there are several options available to you. One is an Offer in Compromise or an OIC, through which you offer to pay the IRS less than the total you owe. The IRS considers OICs on a case-by-case basis by looking at the following:
Before the IRS can consider your application for an Offer in Compromise, you must have explored all other options for repaying your tax debt, including submitting a payment plan. Miller & Company LLP, NY Certified Public Accountants, a top rated NYC CPA firm.
If you think you’ll qualify for an Offer in Compromise, then Miller & Company with office locations in NYC and Queens can pre-qualify you, confirm your eligibility and put a proposal together for you.
To make its determination, the IRS requires a full financial work-up of your situation to fully assess your ability to pay. Submitting an Offer in Compromise can be complex and time-consuming. You need knowledgeable tax accountants on your side to not only complete the paperwork, but also to:
NYC CPA firm Miller & Company have experienced tax accountants to pull everything together. They confirm your eligibility and generally take the stress out of the situation. They even represent you to the IRS, so you don’t have to talk to them yourself. In fact, you should direct all IRS attempts to contact you to your CPA. Top accountant in NYC, Miller & Company recommends that you not speak directly with an IRS agent.
As with all requests to the IRS that involve large debt, you must be current on all other tax returns, except for the year in which you’re requesting an Offer in Compromise. If you own a business, all your business taxes for the quarter must be paid and current. You may not be in the process of filing for bankruptcy — because if you are, all your government debts must be included in your bankruptcy filing.
The government expects that you’ve already done the common things to raise money — things like liquidating assets where appropriate, selling off stocks and bonds (but not from your retirement account) and selling extra vehicles or even homes — to try to pay your debt. You have to do everything humanly possible before you apply for any kind of plan or settlement.
The IRS prefers you pay your tax debt in full and in a lump sum. If your financial statement shows you can do that by selling off some of your assets, the IRS rejects your OIC quickly. If, however, you can show that paying in full would cause an economic hardship, where you can show that paying your debt would leave you unable to pay for your basic living expenses, the IRS could agree and approve your OIC.
The only other circumstance that may cause the IRS to consider an Offer in Compromise is if the amount you owe is somehow in doubt. This is a rare occurrence and can usually be sorted out rather quickly. In the meantime, make payments on your tax liability balance, as specified by the IRS, until the correct amount is verified.
If you still think you’ll qualify for an OIC, then Miller & Company can pre-qualify you, confirm your eligibility and put a proposal together for you. Pre-qualification involves reviewing your financial situation as thoroughly as if they were performing an audit. Once your CPA agrees that an Offer in Compromise may be successful, you’ll need to determine the amount to propose for the IRS settlement.
The formula for figuring out the lowest percentage of the total debt owed that the IRS may accept looks something like this:
All payment plans and requests for debt assistance require an application fee. Offers in Compromise are no exception. You must pay a non-refundable $186 application fee, as well as an initial payment. You can choose how to settle that initial payment:
Getting an Offer in Compromise accepted relies on three things:
If the IRS rejects your OIC, you have 30 days to file an appeal. While you’re in the midst of this process, the IRS won’t pursue collections efforts, not even during the 30-day appeals window. Rejections, delivered by mail, come with explanations for the rejection.
Be aware that even if you have an accepted OIC, the IRS may still take part or all of your federal tax return every year and apply it to the balance owed. For OICs accepted under DATC or ETA, you’re required to pay all taxes on time and to file your tax returns on time every year for the next five years. If you don’t, or if you miss a payment on your OIC agreement, the IRS can declare you in default and come after you for the full amount of the balance owed, including all penalties and interest.
Do you have questions about services we offer including Offer in Compromise in NYC and Long Island? Would you like to receive a personal Offer in Compromise consultation customized to your specific needs? To schedule an appointment with a nationally recognized, top accountant in NYC, Paul Miller of Miller & Company LLP firm, please contact our Long Island or NYC tax accountants for a FREE CPA consultation.
|Queens CPA Firm
Miller & Company LLP
Paul Miller, CPA (Queens Certified Public Accountants)
141-07 20th Ave, Suite 101
Whitestone, NY 11357
☎ (718) 767-0737
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Miller & Company LLP
Paul Miller, CPA (NYC Certified Public Accountants)
274 Madison Avenue, Suite 402
New York, NY 10016
☎ (646) 865-1444