The article below has been prepared to act as an IRS Offer in Compromise resource page whereby individuals can obtain necessary information regarding an IRS Offer in Compromise. Please note, this information is not legal advice and should not supplement the advice of a tax attorney or tax professional.
What is an IRS Offer in Compromise?
An offer in compromise allows a taxpayer to settle their tax debt with the Internal Revenue Service for less than the total amount of tax owed. Generally, the IRS will accept an offer in compromise if the offered amount by the taxpayer is the most the IRS could collect from the taxpayer within a certain period of time.
Offer In Compromise Pre Qualifier Tool
The IRS has an Offer in Compromise Pre Qualifier tool that can be very useful to taxpayers wondering if they would be eligible for an IRS Offer in Compromise. The pre qualifier tool initially asks the taxpayer questions related to tax return filings, estimated payments and other tax payment & filing issues as well as bankruptcy (click for initial questions). These issues could dictated whether or not a taxpayer is even eligible to submit an IRS Offer in Compromise. Thereafter, the Offer in Compromise Pre Qualifier Tool asks financial questions related to income, expenses, assets, asset values and loans. These financial questions break down a taxpayer’s equity in assets and disposable income which are the major factors considered by the IRS when accepting or rejecting an offer in compromise.
IRS Offer in Compromise Form
Form 656 is the form submitted to the IRS when submitting your offer in compromise. Form 656 states the taxpayer’s information, the tax types and periods of which the taxpayer is attempting to settle, and perhaps most importantly, the offer in compromise amount and terms for payment. In addition to Form 656, the taxpayer must submit the proper financial statement. An individual taxpayer will submit Form 433A OIC, and a business taxpayer will submit Form 433B OIC. If an individual has ownership interests in a business, the individual would likely need to file Form 433B for such business.
Where To Submit Your IRS Offer in Compromise
Your offer will initially be submitted to one of two offer in compromise units, which are in Memphis, TN and Holtsville, NY. Where you live, will determine the office where you will file your offer. The offer in compromise booklet provides the correct address based upon where you live.
What Decisions can the IRS make regarding my Offer?
The IRS can either accept, reject or return your offer. Acceptance, of course would be preferred! If the IRS rejects your offer, they may reject the amount, but agree to a larger amount and thus you may still be able to settle your tax debt. You can also appeal the rejection by filing Form 13711. The IRS will return an offer if, for example, the taxpayer is out of compliance. You do not have appeal rights on a returned offer.
What Information is Public?
The IRS does make certain information regarding offers public. Click, “information” for addresses of IRS offices with information open to public inspection.
IRS Publication 594 discusses the IRS collection process and may be useful to you as you are considering submitting an offer in compromise to the IRS. Generally, submitting an offer to the IRS acts as a hold on enforcement.
If you have questions regarding the IRS Offer in Compromise process or your ability to settle a tax debt, you can discuss these issues with a tax attorney at The McGuire Law Firm. A free consultation is provided to all clients.