You have heard advertisements which state "You can settle your back tax debt for pennies on the dollar". It’s important to know that the IRS doesn’t just approve everyone's Offer-in-compromise that requests one. The IRS must have a reasonable doubt that they will not be able to collect the full amount owed. You basically need to prove that the reduced settlement amount is the maximum amount they can expect to receive.
Below is the process that must be followed to request an Offer-In-Compromise:
- First, you apply for an Offer in Compromise (OIC) using Form 656.
- You must pay a $205application fee to apply.
- You must also provide a full financial disclosure that details all your income, expenditures, assets and equity.
- For wage earners and self-employed workers, you then must complete Form 433-A the “Collection Information Statement”; you also will need to submit supporting documentation.
- The IRS reviews your application package. If it’s accepted, settlement negotiation begins.
- You and the IRS come to an agreement of what percentage of your back taxes you can afford to pay back.
- Then once accepted, you have 2 years to repay that amount.
- You must continue to file taxes for each new year. If you receive a refund from filing within that two-year period, the IRS will apply it towards your settlement.
The focus of our practice is helping individuals and businesses resolve their IRS tax problems in the Las Vegas, Nevada, St. George, Utah areas, and elsewhere. If you or someone you know is dealing with IRS problems, contact me at 702-469-9426 or candy@numbercruncherllc.tax.
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