Frequently Asked Questions: Offers In Compromise
An offer in compromise (OIC) is a tax-relief option that provides you with a way to settle any tax debt owed to the IRS or state taxing authorities for less than their full amount.
At the Law Offices of Robert T. Leonard, we counsel clients in California and throughout the nation regarding OIC and other issues related to tax controversies and tax litigation. Although your specific situation — including the strategies used and the results you can expect — is unique and requires a custom-tailored solution, the information below can serve as a broad overview on the topic of OIC. Please contact us to discuss your circumstances and learn more about how OIC may benefit you.
Do I Qualify For An Offer In Compromise?
Eligibility for an offer in compromise typically requires you to claim doubt of liability (the IRS did not give you a chance to dispute liability), doubt as to collectability (you will never be able to pay the entire tax bill), or inequity (making you pay the full amount of tax would be unfair or lead to economic hardship). While it may seem as though there is clear evidence of these factors, you will need to present your offer and supporting evidence in a way that shows the existence of these factors to the satisfaction of the IRS. This is an intensive and difficult process, and should not be undertaken without the guidance of a seasoned tax controversy attorney.
Should I Submit An Offer In Compromise?
OIC can be the best option for obtaining relief from tax debt, but it depends on a variety of factors. There are benefits (paying a lower amount) and drawbacks (suspension of the collection statute expiration date, length of the process, suspend timing rules regarding the availability of bankruptcy, provide a “roadmap” to where all your assets are in the event the offer is returned or rejected, possibility that your offer is not accepted) that must be carefully weighed before you decide whether OIC or some other option is best for you.
What Payment Options Are Available In OIC?
OIC payments can be made in periodic (monthly installments) or lump sum form.
What Is Contained In An Offer In Compromise Package?
In addition to a filing fee, offer in compromise packages contain extensive documentation of your financial situation. This typically includes pay stubs, bank records, investment records, property records and many other items that paint a clear picture of your current and future financial status. Without proper documentation, the IRS or other tax authority may simply return your request instead of rejecting it and letting you file an appeal. This delay can make the OIC process drag on for longer than necessary.
Can I Appeal A Rejection Of An OIC?
Within 30 days of having an OIC rejected, you can file a request for an appeal with the IRS. Even though an appeal is possible, it may not be the best strategy for resolving your case. We can help you understand how to proceed in a way that is best suited to accomplish your goals, and help you execute a plan that is as efficient and effective as possible.
How Does An OIC Affect Collection Statue Expiration Date (CSED)?
Filing an OIC will suspend the tolling of the collection statute expiration date. This means that the date after which the IRS will no longer be able to collect an assessed tax debt will be pushed farther into the future. If you are trying to negotiate tax years that are at least five to six years old, you should know the dates of the collection statute expiration date prior to submitting an offer in compromise.
How Do I Contact Your Firm To Learn More?
Call us at 818-485-2115 to schedule a free, confidential attorney consultation. During your consultation, you will meet directly with lawyer and CPA Rob Leonard, who will provide you with customized advice based on your specific circumstances. We represent clients located in Woodland Hills, Los Angeles and the San Fernando Valley, as well as in other parts of California and throughout the nation.