Offer in Compromise (OIC)

Offer In Compromise Program to the Rescue

Many people are mentally debilitated with the fear, worry and stress of unpaid tax liabilities which, in many cases, have collected and compounded over the years with no apparent light in the taxpayer’s dark tunnel. If this is you, stop agonizing and take action! There is hope. In fact, it may very well turn out that you are agonizing and stressing-out over matters than can be resolved fairly rapidly and with mere pennies on the dollar —legally and completely— providing you with the fresh start that you deserve.

We help clients craft and create Offers In Compromise with the State and the IRS. Call us to set up a no-cost consultation, to discuss if you qualify for these programs to settle your taxes once and for all!

Owe Taxes? Can’t Pay? See If You Qualify To Settle For Less

If you owe taxes and can’t pay all at once, or even over many months, we can help to see if you qualify to settle for less. The Tax Resolution Lawyers at Vincent W. Davis & Associates are expert at helping taxpayers reduce their state and federal tax liabilities through the various state and IRS programs such as the Offer in Compromise (OIC) program. The federal process of submitting an Offer in Compromise and obtaining IRS acceptance is fairly complicated. Successful outcomes require substantial attention to detail, and compliance with very specific IRS procedures, guidelines and regulations. Often, the difference between approval and rejection of your Offer in compromise is determined by the knowledge and experience of your tax resolution lawyer who will guide you through the process from start to finish.

A Tax Resolution Lawyer’s experience and knowledge are even more important following the Tax Increase Prevention and Reconciliation Act of 2005 that was signed into law on May 17, 2006 by then president, George W. Bush. Section 509 of this law creates significant changes to the IRS Offer in Compromise (OIC) program by amending IRC 7122. That additional legislation added substantial complexity to the IRS Offer in Compromise program making the submission of an Offer In Compromise ever more difficult. In addition to the many revisions contained in the new Act, this legislation requires a taxpayer to submit a minimum 20% down payment along with the submittal of a taxpayer’s “lump sum offer.”

In order to comply with the new down payment requirements and other procedures laid out by the updated legislation, requires careful planning and execution where experienced guidance is more necessary than ever. The good news is that when accepted, your tax nightmare is finally on the road to recovery and your stress and anxieties will soon be behind you.

What is an Offer In Compromise?

An Offer in Compromise (OIC) is an agreement between the taxpayer and the federal government that settles a tax liability for payment of less than the full amount owed. The IRS will generally accept an Offer In Compromise when it is demonstrated that it is unlikely that the tax liability can be collected in full and that the amount offered by the taxpayer is probably as much and the IRS calculates that it could reasonably collect from the taxpayer’s assets and disposable monthly income if it were to press collection. Remember, there is a great expense to the government in time and money to collect delinquent taxes – so the IRS is often willing to settle.

The process for determination is referred to as the “reasonable collection potential.” The IRS will view an Offer In Compromise as a reasonable alternative to declaring a case currently not collectible or entering into a long and drawn-out “installment agreement” with a taxpayer.

The IRS, just like a reasonable person, has the ultimate goal in approving an OIC if they calculate that they can collect of the amount that it believes to be potentially collectible from a taxpayer in the shortest amount of time with the least cost to the government.

The IRS is incentivised to say “YES!” to a reasonable offer

The government (the IRS) is already the biggest collection agency in the world; and now the IRS is being asked to become the new collection agency and enforcer for new and huge health care legislation which might demand $1,000 to $2,000 in fess and penalties for those who choose not to secure health care for themselves and their families. Moreover, those who do purchase health insurance will need to prove that their policy provisions meet the approved criteria which would also fall the the IRS for verification. Tax rates in 2013 are rising to deduce the nation’s debt and all this additional burden makes settling the collection of “old debts” a priority whereby the agency will often “say yes” to most any reasonable offer to “settle up.” Moreover, the government’s rationale is that these OIC settlements are in the government’s best interest because statistic prove out that following its acceptance of a taxpayer’s adequate offer the result will be to create a “fresh start” for the taxpayer. Statistics also prove that a fresh start will result in more regular compliance with future filing and payment requirements from those taxpayers the IRS grants significant “forgiveness” and discounts. It is human nature and it works —for both the taxpayer and the IRS!

The IRS has all New Tasks – This is a Great Time to Submit an Offer

If you find yourself between the proverbial rock and hard place, this is a great window of opportunity for you to put your unfiled returns or unpaid tax liability in your rear-view mirror once and for all. There is a caveat, however. Once an Offer In Compromise is accepted, that the taxpayer must remain in compliance with all filing and payment requirements for the next five years. We will help you meet that requirement as well. Our Tax Resolution Lawyers can make sure that you comply by watching out for all the necessary dates and assisting you with filing your future returns. If your personality is such that you need constant reminding, just tell us and we’ll help you to stay in compliance: we are truly here to help. It won’t be all that difficult. Since we will already have all your tax data, you might be surprised to learn that compiling future returns will be fast and painless and we are as affordable and reasonable as most any other tax professionals with the added benefit that you have all the protections of the “attorney client privilege” which is not possible with an accountant, a CPA, or seasonal tax preparer.

Types of Offers In Compromise

Three different kinds of Offers in Compromise:

1. Doubt as to Collectability – Based on your circumstances, there is doubt that you could ever pay the full amount of tax owed. Before the IRS can consider a “doubt as to collectability” offer, it must be demonstrated that the taxpayer must not be able to pay the taxes in full either by liquidating assets or through installment agreement payment guidelines.
2. Doubt as to Liability – When it is demonstrated that some doubt exists that the assessed tax is correct, or it can be proven that you do not owe the tax assessed against you. If you and your Tax Representative do not believe that you owe the tax liability, then OIC is submitted for “Doubt as to Liability.” When submitting a Doubt as to Liability OIC-Offer it has to be accompanied with a detailed written statement explaining why the taxpayer believes they are not liable for the tax bill in question.
3. Effective Tax Administration (ETA) – When the taxpayer agrees with the delinquent tax amount that the IRS is seeking to collect and might even be able to pay the full amount owed based on assets or income, but for an exceptional circumstance. To be accepted for an Effective Tax Administration OIC, the taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable. The taxpayer or legal representative must submit a “collection information statement,’ various attachments to the statement, and a written narrative fully detailing the taxpayer’s special circumstances and how payment of the full delinquent tax amount would create an economic hardship or would be unfair and inequitable.

Three different payment periods that might be allowed:

• Cash – paid in 90 days or less following acceptance of OIC petition;
• Short-Term Deferred Payment – paid between 90 days and up to 24 months; or
• Deferred Payment – to be paid over the remaining statutory period of the tax liability.

Types of Offers In Compromise

For taxpayers who can qualify of an Offer in Compromise, the end result will see some or all of their tax debt forgiven which will resolve their tax problem and provide them a ‘fresh start’ with the IRS. Drafting an effective Offer in Compromise is complicated and the chances for it being accepted will have a lot to do with the knowledge and experience of your tax professional. If you are facing tax debt that is overwhelming and want to get started exploring the many options available to taxpayers in difficult situations, give a call to the Tax Resolution Lawyers at Vincent W. Davis & Associates.

Get some help —Make that call!

The Tax Resolution Lawyers at Vincent W. Davis & Associates, provide a no-obligation, confidential consultation and have appointments available for evenings and weekends. Moreover, we accept all major credit cards and can make other payment arrangements so that we can help you get your tax problems straightened out without adding additional layers of financial burden on you and your family. We have seven convenient offices throughout Southern California, including Los Angeles County, Orange County, Riverside County and San Bernardino County. To schedule a confidential consultation with one of our Tax Resolution Lawyers, call 626-446-6442.

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