You have tax debt when you owe a huge amount of money or do not pay or file your taxes. The IRS can charge tax penalties and interest on that debt and those will add up until you pay off the tax debt. It will be a big problem for you if you receive letters from the IRS, but it is possible to settle tax debt for less than you owe with the IRS. You have often heard about “Settle tax debt for pennies over dollars.” This can actually be done by using the OIC program.
Here’s A Description of this Program And Way to Settle Your Debt in Granada Hills, CA:
Offer in Compromise (OIC):
An “Offer in Compromise” is an agreement between a taxpayer and the IRS that settles a taxpayer’s tax liabilities for less than the full amount owed. OIC or “IRS tax settlement” is probably the most talked about thing when it comes to resolving IRS tax debt. It may be a legitimate option if you cannot pay your full tax liability.
The IRS considers your following unique set of facts and circumstances while having agreement:
- Ability to pay
- Asset equity
The IRS generally approves an Offer in Compromise when the amount offered represents the most they can expect to collect within a reasonable period of time.
Following Steps Are Taken to Settle Your Tax Debt Using The OIC Program in Granada Hills, CA:
1. Make Sure You Are Eligible:
The IRS will return any newly filed Offer in Compromise (OIC) application if you have not filed all required tax returns and have not made any required estimated payments. Any application fee included with the OIC will also be returned. Any initial payment required with the returned application will be applied to reduce your balance. Anyone with an open bankruptcy is not eligible.
2. Submitting Application:
Find forms for submitting an application and step-by-step instructions in Form 656-B Offer in Compromise Booklet. Your completed offer package will include:
- Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms;
- Form 656(s) – individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656;
$205 application fee (non-refundable); and Initial payment (non-refundable) for each Form 656.
3. Selecting a Payment Option:
Your initial payment will vary based on your offer and the payment option you choose:
•Lump Sum Cash:
Submit an initial payment of 20 percent of the total offer amount with your application. If your offer is accepted, you will receive written confirmation.
Submit your initial payment with your application. If accepted, continue to pay monthly until it is paid in full.
If Your Offer is Accepted:
If your offer is accepted then you must meet all the Offer Terms listed in Section 7 of Form 656, including filing all required tax returns and making all payments. Any refunds due within the calendar year in which your offer is accepted will be applied to your tax debt.
This article provides you with a brief description of the settlement of your tax debt in pennies over dollars.
Zee Maq is a content writer who specializes in writing business and finance content. She has nine years of experience and loves to provide problem-solving content to help people tackle challenges in their everyday lives.