To be eligible for compromise (OIC, or tax settlement) on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.
What is a tax settlement or an offer in compromise?
An IRS offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed. If the tax liability can be fully paid through an installment agreement or other means, the taxpayer will not be eligible for an OIC or IRS tax settlement.
The IRS will not accept a tax settlement (an OIC) unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (the RCP).
The Reasonable Collection Potential (RCP) is how the IRS measures the taxpayer’s ability to pay. The RCP includes the value that can be realized from the taxpayer’s assets such as: real property, automobiles, bank accounts, and other property. In addition to property, the RCP also includes anticipated future income.
THE IRS MAY ACCEPT AN OIC BASED ON THREE GROUNDS:
THE “NEW” FRESH START PROGRAM:
Since 2011, the “Fresh Start” initiative has been offering more flexible terms to its Offer in Compromise (OIC) program that enables financially distressed taxpayers to clear up their tax situation much faster.
Financial analysis is used to determine which taxpayers qualify for an Offer in Compromise. This enables some taxpayers to resolve their tax problems in as little as two years, compared to four or five years in the past.
TAX SETTLEMENT COMPANIES WHO PROVIDE TAX SETTLEMENT SERVICES OR OFFER IN COMPROMISE
Look at Joshua A. Webskowski, EA, USTCP. He and his team are one of the true authorities on Offer in Compromise. We are affordable, friendly, and accessible.
We are Former IRS Agents, Former IRS Instructors, and Former IRS Managers in addition to Board-Certified Tax Attorneys, CPA’s, Enrolled Agents, Our team has a combined 130 years of direct IRS working experience in the local, district, and regional offices of the IRS.
We have taught Federal Tax Law at the IRS and taught the Offer in Compromise Program (Tax Settlements). We have successfully worked on thousands of cases.
Beware: There are many tax scam tax settlement companies that exist on the internet. Many of these companies sign you up, then sell your information to the highest bidder. These salespeople have little (if any) professional knowledge about offers in compromise. Companies like J.K. Harris, Ron Duetche, and Tax Master have all been closed by the Attorney General’s office.
Make sure you are dealing with a reputable company. Check out their professional credentials, check the firm bio page for their skill level and experience.