What is an Offer in Compromise (OIC) Tax Relief?

An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that allows the taxpayer to settle their tax debt for less than the full amount owed. The offer amount is based on the taxpayer’s ability to pay, and takes into account their income, expenses, and asset equity.

The OIC process begins with the submission of a completed application, including supporting documentation, along with a non-refundable application fee. Once received, the IRS will review the information and make a determination as to whether or not the Offer is reasonable and in compliance with all applicable rules and regulations.

If you are found eligible and your offer is accepted, you will be required to make periodic payments until the balance owed is paid in full. If you default on your payments or fail to comply with any of the terms of your agreement, your offer will be rejected and you will be liable for the full amount of your tax debt plus interest and penalties.

The OIC program can provide much-needed relief for taxpayers who are struggling to pay their taxes but it’s important to understand that it’s not a quick fix or an easy way out. Making an Offer in Compromise is a serious undertaking that should only be considered after all other options have been exhausted.

Benefits of an OIC Tax Relief

The IRS provides two types of tax relief for spouses who are financially burdened by their spouse’s tax debt: Innocent Spouse Relief and Offer in Compromise (OIC) Tax Relief.

Innocent Spouse Relief allows a taxpayer to be relieved of responsibility for paying taxes, interest, and penalties if their spouse incurred the debt without their knowledge or consent. To qualify, the couple must have filed a joint tax return, and the innocent spouse must not have been aware of or consented to the actions that led to the tax debt.

OIC Tax Relief is available to taxpayers who cannot pay their full tax liability and may offer to pay a reduced amount to settle their debt. To qualify, taxpayers must demonstrate that they are unable to pay the full amount of taxes owed and propose an acceptable offer amount based on their ability to pay. The IRS will consider factors such as income, expenses, and asset equity when evaluating an OIC request.

Both Innocent Spouse Relief and OIC Tax Relief can provide significant financial relief for taxpayers struggling to pay their taxes. If you think you may qualify for either program, contact a qualified tax professional to discuss your options.

Applying for OIC Tax Relief and the Process Involved

If you are facing a tax debt that you cannot pay, you may be able to apply for Offer in Compromise (OIC) tax relief from the Internal Revenue Service (IRS). The OIC program allows taxpayers to settle their tax debt for less than the full amount owed. To qualify for OIC relief, you must meet certain requirements and follow the application process.

To start, you must complete and submit Form 656, Offer in Compromise. This form includes information about your financial situation and why you are unable to pay your tax debt. You will also need to submit a non-refundable application fee of $186.

After submitting Form 656, you will need to provide additional documentation to support your offer. This may include financial statements, bank records, pay stubs, and proof of income. Once your offer is received and reviewed by the IRS, they will determine if you qualify for IRS offer in compromise form.

If your offer is accepted, you will be required to make monthly payments until your tax debt is paid in full. If your offer is rejected, you may appeal the decision or continue to try to negotiate with the IRS.