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IRS OIC: What Is It?
By Darrin Mish
A process that allows you to pay only a potion of your tax debt (as little as 1% of the tax due) to the IRS is known as an Offer in Compromise (OIC). To be able to qualify for this, strict requirements need to be met. In America, other than paying it, taxpayers have no right to have a tax debt reduced. The reduction of anyone's tax bill is completely at the government's discretion. Fortunately, the IRS is required to provide a just amount of consideration to OICs that are properly submitted in most cases. There is a very slim chance of getting accepted. Accepted OICs are less than half of what's submitted, but fortunately, your options don't stop there. If your submitted OIC is rejected, you then have the ability to take it to the IRS Appeals Office for further review of your IRS issue. Submitting an OIC has a formal and strict process involved. Your first step is to complete IRS Form 656, Offer in Compromise. This isn't free, and you should attach a $150 fee upon submission. If you can prove that you qualify under particular poverty guidelines, you may be exempt from this $150 fee. An Application Fee Worksheet from the Form 656 booklet must also be submitted if you're claiming exempt status. The OIC process is not quick and easy. There will be several steps to take once you accomplish the initial forms. Once you've filed the forms, you will be requested to provide financial documents supporting your case. These forms may or may not be readily available like pay slips, bank records, and vehicle registration. You should assess the advantages and the costs of utilizing this method to fix your IRS problem because it's considerably time-consuming to submit an Offer in Compromise. Also, if your OIC is rejected, the IRS can use the information you provided to aggressively collect the debt you owe them. It's an excellent idea to make sure your case is substantially compelling before you actually submit an OIC. To qualify for OIC consideration, you should satisfy any of three conditions. One condition states that you must prove substantial doubt that the tax debt can be collected from you now or in the future, or doubt as to collectability. Doubt as to liability is another condition. This would entail providing sufficient evidence to question if you're indeed liable for the tax debt. The final concept states that paying your tax debt in full is unfair as it will place you at an extreme economic hardship.
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