Have you received a request for a payment letter from the IRS? Are you worried you won’t be able to pay them back if you keep up with your payments? Then apply for an IRS Offer of Compromise.
The IRS Offer on Compromise Program allows you to settle outstanding tax liabilities for less than what you owe without being referred to the Department of Justice for prosecution.
Are you interested in learning how to qualify for an IRS Offer in Compromise? Then read on.
File All Required Tax Returns
If you have filed all required tax returns and believe you are unable to pay your full tax liability, you will be qualified for an Offer in Compromise. The OIC is an agreement between you and the IRS. It helps you get resolved with your tax debt. You get to resolve it lesser than the amount you owe all in all.
You must have filed your federal income tax return for each year you owe taxes and any other required tax returns, such as your state income tax return. If you have not filed all the necessary tax returns, you will not be eligible for an Offer in Compromise.
Pay All Taxes Due for the Current Year
To do this, you must show that you have paid all taxes due for the current year and that you cannot pay the total amount of the tax liability you owe. You must also show that you have inputted all information and financial documents needed for the Offer in the Compromise form. After you have submitted the record, the IRS will review your case and determine if you qualify for an Offer in Compromise.
Be Up-To-Date on All Tax Filings and Payments
Your debts can be settled for less than the total amount you owe in this program. To qualify, you must be up-to-date on all tax filings and payments.
You will also need to prove that you cannot pay the total amount of your debt and that paying the reduced amount would create financial hardship. The Offer in Compromise program is not available to everyone, but it is worth exploring if you cannot pay your total tax debt.
Prove That You Cannot Pay the Full Amount You Owe
You need to prove that you cannot pay the total amount you owe. This may be due to financial hardship or other extenuating circumstances. To prove this, you must provide documentation of your income, expenses, and assets.
The IRS will then review your case and determine if you are eligible for an offer in compromise. If you are having difficulties paying, you must be eligible for debt forgiveness.
Negotiate an Acceptable Offer with the IRS
If you want to qualify, you’ll need to complete the Offers in compromise application and submit it to the IRS. You’ll also need to provide information about your financial situation, including your income, expenses, assets, and liabilities. The IRS will review your Offer and determine if it’s acceptable.
Understanding the Offer in Compromise
If you struggle to pay your taxes, an Offer of Compromise may be a good option. The IRS will consider your financial situation, income, assets, and expenses when determining if you qualify for an OIC. If you think you may be eligible, you can apply online or by mail.
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