Feeling overwhelmed by your tax debt? If the amount you owe is causing you anxiety because you have no clue how you’ll manage to pay it in your lifetime, you might want to look into an Offer in Compromise (OIC). An Offer in Compromise is a way to settle your taxes for less than what you owe. While settling on a traditional debt for less than what’s owed isn’t uncommon, it’s a bit of a different story with the IRS. But it’s definitely possible and it can be a great option for those who qualify.
A lot of people don’t know that OICs exist because they’re not heavily advertised, and they’re certainly not front and center on the IRS’s homepage. Some companies even advertise the service as new, or as a “limited time offer” but OICs have actually been around since 1954. Nevertheless, the application process can be overwhelming which makes OICs quite challenging for the average taxpayer to obtain if they don’t enlist any outside assistance. If you do plan on applying for an OIC, it’s highly recommended that you hire a professional to help you USA Tax Settlement.
Who’s a good candidate for an OIC?
An OIC is generally geared toward people who, given their income or future assets, will never be able to pay all of their debt before the IRS runs out of time to collect it. It can also apply to individuals who don’t think they owe the taxes in question, or those who can pay the taxes owed given their income and assets, but in doing so it would cause undue hardship. There are three types of OIC that taxpayers can apply for based on the aforementioned circumstances.
Here are the three types of OIC:
- Doubt as to Collectibility (OIC-DATC) applies to the first scenario mentioned above and it’s geared toward those who can’t afford to pay their taxes given their income and assets.
- Doubt as to Liability is the second type and it applies to those who don’t think they owe the taxes in the first place.
- Effective Tax Administration is the third type and it’s geared toward the final group – individuals who are able to pay their taxes based on their income and assets, but for whom it would cause undue hardship or other extenuating circumstances to do so.
What you should know before submitting your OIC application
While an Offer in Compromise is certainly appealing and it can be a great way to reduce your overall debt, just know that fewer than half of the people who apply will actually be approved. This, however, should not discourage you, and working with a good tax settlement company UTS Contact us Page will significantly improve your chances of having your application accepted.
Application fees & upfront payments are non-refundable but they apply toward liability
With OICs, please keep in mind that the fees and upfront payments are non-refundable, but they will ultimately apply toward your liability. It’s a time-consuming process that costs some dough, so being thorough and doing it right is important. If you’re accepted, you’ll need to meet the terms of your agreement as well, otherwise, the IRS may come after you for the original tax debt (minus any payments you’ve already made), plus penalties and interest.
Overwhelmed? Remember, you don’t have to do this alone
Finally, and now that we’ve covered the basics while perhaps leaving you feeling thoroughly overwhelmed, we’ll just say this: don’t worry! Yes, applying for an Offer in Compromise can feel daunting, and true, there’s a lot of paperwork, and YES, there’s a boatload of math involved, but guess what? We’re no strangers to OICs and we have the experience to help get your OICs accepted. If you think you might be a good candidate for an OIC or you’d like to learn more, please reach out to us here at UTS. We really want to help you and we’re ready to answer all of your questions while addressing your concerns as well. It costs you nothing to just reach out and talk to us. Plus, if you do decide to move forward with the application, it won’t cost you an arm, a leg, or your firstborn to do it with UTS. Click here USA Tax Settlement to connect and learn more.