Offer in Compromise Help: Improve Chance of Acceptance With OIC Tax Services
It can be very difficult to submit an Offer in Compromise (OIC) application, and unfortunately, the IRS and states reject the majority of requests to settle your tax debt for less than you owe. To improve your chances of approval, you may want to get help from a tax professional. OIC tax services can be provided by a tax resolution firm or licensed tax experts such as Enrolled Agents, Tax Attorneys, or CPAs. Professionals look at your tax problems, and they ensure you are qualified and eligible to submit an Offer in Compromise for your IRS tax debt. They also leverage their experience to help you make an offer that the IRS is likely to approve.
How Do OIC Tax Services Work?
Here is an overview of the general process you'll experience when you get an expert to help you apply for an offer in compromise on your tax debt.
- Most pros will offer a free consultation or low-cost consultation where a tax professional or representative will ask you questions regarding your tax debt, income, assets, liabilities, and expenses.
- Next, a tax professional will determine if you are a good candidate for the Offer in Compromise program.
- If the offer in compromise isn’t likely to be accepted, the tax pro will present you with other advantageous options to resolve your tax debt.
- If you decide to move forward with an option (again, there is no obligation to continue after the consultation), you will sign a limited power of attorney form. This gives your tax professional authority to talk with the IRS or your state tax agency about your tax debt. At this point, the IRS will direct all communication to the tax professional. You will no longer get annoying phone calls or letters.
- The tax professional prepares all the necessary paperwork for the OIC application.
- They will generally ask for 3 to 6 months of bank statements, investment statements, credit card statements, and other documents if you are applying for an Offer in Compromise.
How Do Tax Experts Help With the OIC Process?
When you hire someone who provides OIC tax services to help with your OIC application, they provide many benefits. In particular, OIC tax experts can help you with the following:
1. Prescreening you for the OIC.
Only the IRS can tell you if you're accepted or denied for an OIC. In fact, if someone tells you that you can get an OIC before they know any details, you should probably not work with them. They are not the IRS. Only the IRS can determine if you truly qualify or not. However, people who provide OIC tax services for a living have a good idea if their clients are right for this program or not. They can talk with you about your situation and help you determine your likelihood of getting approved.
2. Preparing the OIC application.
If are you a great candidate, the tax pro prepares the required documents, and they ensure that you submit everything correctly. The OIC application is long and detailed. You also need to ensure that you choose the right application for your unique situation. Depending on the specifics, you may apply based on doubt as to collectibility, doubt as to liability, or effective tax administration.
3. Calculating the optimal offer.
Calculating an appropriate offer amount to make to the IRS is difficult. Your offer amount needs to be equal to or greater than your reasonable collection potential (RCP). The RCP is how the IRS measures the collectibility of taxpayers. The RCP is the realized value of your assets, plus future income minus amounts permitted for basic living expenses.
4. Ensuring the offer works with your budget.
Furthermore, they negotiate a settlement that works for your budget. If applicable, they show the IRS or State that liquidating your assets to pay would create an undue hardship, or they may argue that you need a higher than usual allowance for certain expenses. People who provide OIC tax services know what the IRS wants to see in your application, and they use their experience to your advantage.
5. Helping you understand the post-acceptance process.
If the IRS approves your offer, the journey is still not over. For the next five years or so, you must stay compliant with a variety of tax rules. If you don't, the IRS can rescind the offer and require you to pay the tax bill in full. Your tax expert will ensure that you understand the requirements, and as needed, they can help you to stay compliant.
Who Needs OIC Tax Services?
The OIC program is one of the hardest tax resolution options to get. A payment plan, in contrast, is much easier to get. If you're accepted for an offer in compromise, the IRS agrees to reduce your tax debt and let you pay off your tax bill for less than you owe.
However, no OIC applications are automatically accepted. The IRS will only reduce tax bills in situations where the taxpayer truly cannot afford to pay the entire bill or when forcing them to pay the whole tax debt would be inequitable (unfair).
Wondering if you should contact a tax expert about OIC tax services? Here are some signs that you should get help.
You don't have a lot of experience dealing with the IRS.
Tax experts deal with IRS-related problems every day. They know how to negotiate the best settlement possible. They can also take the heat off you. Collection efforts like bank levies and threatening letters can be exhausting. Tax experts can communicate with the IRS on your behalf so you can get back to the rest of your life.
You want the lowest settlement possible.
The IRS decides whether or not to accept your offer based on your ability to pay. To influence the agency to accept a low offer, you must show that you can't afford to pay any more than you're offering. This process is more than just numbers. It can also include establishing why you need an allowance for certain expenses or showing that the value of some assets is less than the IRS thinks. Tax experts can be invaluable with this process.
You can afford to pay but it wouldn't be fair.
In this case, you should apply for an OIC based on effective tax administration. This is a slightly different process than if you just can't afford to pay the whole tax liability. Tax experts know how to leverage the tax code when applying for settlements based on effective tax administration.
You don't really owe the tax liability.
In this case, you need to apply based on doubt as to liability. That requires a solid understanding of the tax code which most individuals don't have without assistance from a pro.
You want a business OIC.
For businesses to obtain relief, they have to supply even more information than individuals. A tax expert can handle the paperwork for you.
You have unfiled tax returns.
The IRS won't accept your OIC application if you have unfiled tax returns. When you utilize OIC tax services, your tax pro can help you deal with your unfiled returns as well as the OIC application.
You aren't sure if an OIC is right for you.
Depending on the nature of your tax problems and your financial situation, this may not be the right option for you. When you work with tax experts, they can guide you to the best resolution option for your needs.
Seeking a professional for help with an Offer in Compromise is generally a good idea. The way your financial information is presented directly impacts your eligibility for a settlement. Tax professionals ensure your information is presented in the most accurate way possible. Start a search below, then use the filters and select "offer in compromise" to filter for tax professionals who have offer in compromise experience. At TaxCure, we have a marketplace of local tax professionals, and with our search feature, you can find the tax professionals with the exact experience you need, resolving IRS tax problems.