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Offer in Compromise | IRS Settlement | Flat Fee Tax Relief | Florida

Offer in Compromise - IRS Settlement - Settle with the IRS An Offer in Compromise (#IRSsettlement) allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship. The IRS will consider your unique set of facts and circumstances:

  • Ability to pay;

  • Income;

  • Expenses; and

  • Asset equity.

The agency will generally approve an Offer in Compromise when the amount offered represents the most we can expect to collect within a reasonable period of time. Explore all other payment options before submitting an Offer in Compromise. The Offer in Compromise program (OIC) is not for everyone. If you hire a tax professional to help you file an offer, be sure to check his or her qualifications.

Know this. The IRS wants to accomplish two (2) goals. One is to collect money (the amount is semi important). The other goal is to close a file so the agency can move to the next case. There is always "more files" so the IRS has an incentive to close a case. The trick is to give them a great reason why they can justify a settlement.

Make Sure You Are Eligible

The IRS will return any newly filed Offer in Compromise (OIC) application if you have not filed all required tax returns and have not made any required estimated payments. Any application fee included with the OIC will also be returned. Any initial payment required with the returned application will be applied to reduce your balance due. This policy does not apply to current year tax returns if there is a valid extension on file.

You are not eligible if you are in an open bankruptcy proceeding. You can use the Offer in Compromise Pre-Qualifier to confirm your eligibility and prepare a preliminary proposal. The IRS will approve approximately 42% of the 80,000 Offer in Compromise submissions received every year. The number one reason for an IRS rejection is due to the taxpayer attempting their own Offer in Compromise. It is smart and cost effective to hire an experienced tax professional. Don't over pay for IRS representation.

Submit Your Settlement Offer

You'll find step-by-step instructions and all the forms for submitting an offer in the Offer in Compromise Booklet, Form 656-B (PDF).  Your completed offer package must include:

  • Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms;

  • Form 656(s) - individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656;

  • $205 application fee (non-refundable); and

  • Initial payment (non-refundable) for each Form 656.


Select a Payment Option


Your initial payment will vary based on your offer and the payment option you choose:

  • Lump Sum Cash: Submit an initial payment of 20 percent of the total offer amount with your application. If your offer is accepted, you will receive written confirmation. Any remaining balance due on the offer is paid in five or fewer payments.

  • Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.

If you meet the Low Income Certification guidelines, you do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer. See your application package for details.

Understand the Tax Settlement Process

While your Settlement Offer is being evaluated:

  • Your non-refundable payments and fees will be applied to the tax liability (you may designate payments to a specific tax year and tax debt);

  • A Notice of Federal Tax Lien may be filed;

  • Other collection activities are suspended;

  • The legal assessment and collection period is extended;

  • Make all required payments associated with your offer;

  • You are not required to make payments on an existing installment agreement; and

  • Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date.

Notification

Effective April 27, 2020: The application fee for an Offer in Compromise is $205, unless you qualify for the low-income certification or submit a Doubt as to Liability offer.

All Offer applications must be received on the Form 656 with a revision date of April 27, 2020. The updated Form 656 includes new low-income certification guidelines and instructions.


If Your Settlement Offer (OIC) Is Accepted

  • You must meet all the Offer Terms listed in Section 7 of Form 656, including filing all required tax returns and making all payments;

  • Any refunds due within the calendar year in which your offer is accepted will be applied to your tax debt;

  • Federal tax liens are not released until your offer terms are satisfied; and

  • Certain offer information is available for public review by requesting a copy of a public inspection file.

If Your Offer (OIC) Is Rejected

  • You may appeal a rejection within 30 days using Request for Appeal of Offer in Compromise, Form 13711 (PDF).

  • The IRS Independent Office of Appeals provides additional assistance on appealing your rejected offer.

This article is provided by the tax professionals at Flat Fee Tax Relief who provide valuable IRS tax debt help at a very affordable fee. Our IRS settlement teams are located in Clearwater, Florida, and San Diego, California. We are Accredited by the Better Business Bureau and have a 96% Offer in Compromise success rate. FLAT FEE TAX RELIEF - FLAT FEE TAX SERVICE

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