IRS Offer in Compromise - IRS Compromise Offer

IRS Compromise Offer

The IRS Offer in Compromise program was developed as a last resort for taxpayers looking for an offer in compromise help. To take advantage of the IRS offer in compromise (OIC) program a taxpayer must have exhausted his other resources for payment, and then they are able to apply. Generally, the IRS offer in compromise program is a last resort. The IRS compromise offer is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt by allowing the IRS to exercise the authority to settle, or "compromise," federal tax liabilities. The IRS then accepts less than full payment under certain circumstances. There are certain stipulations that the program must adhere to and below are the reasons a tax debt can be legally compromised.

• Sufficient doubt as to liability; doubt exists that the assessed tax is correct.
• Sufficient doubt as to collection; doubt exists that full amount of tax owed could be paid.
• Effective Tax Administration; there is no doubt the tax is correct, or that the amount owed could be collected, but exceptional circumstances exists in the administration that allows the IRS to consider a taxpayer's offer in compromise request. To be eligible for an IRS compromise offer, the taxpayer must demonstrate that collection of the tax would create an economic hardship or be unfair to the taxpayer.

Offer In Compromise Help

When all other avenues have been exhausted, payment either in full or in installments, it is suggested that the taxpayer first seek an IRS attorney because of the technical and hard to understand language involved within the IRS, and in the IRS offer in compromise program. There is an application fee required and you must continue to pay your taxes while the offer in compromise help is being determined. This would be a period of up to five years.

To be considered for the IRS compromise offer the taxpayer must have met all of the following requirements:

• Used the most current Forms 656, 433-A and 433-B
• Submitted the $150 application fee, and Form 656-A
• Filed all required federal tax returns
• Paid all required employment tax returns on time for the two quarters prior to filing for offer in compromise help, and is current with deposits for the quarter in which the offer in compromise was submitted
• Is not a debtor in a bankruptcy case

This is merely basic information regarding a 1031 Exchange, make sure you consult with your trusted tax advisor or accountant to ensure that you have an in-depth understanding of all of the requirements and tax implications.

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