For several people, tax debt is stressful and frequently debilitating. Therefore, many individuals and businesses are drowning in feeling like the IRS can come after them at any time. In this situation, it is natural that they are starting to find out every possible and legal solution to solve their tax debt issue. You can use Offer in compromise calculator to help determine whether you are eligible for an offer in the compromise program. However, there are many options for debt solutions from the best debt relief company, including an offer in compromise. In this short guide, there is everything about what you need to know about the Offer in compromise. In addition, you will know what is offered in the compromise, how it works, and how you qualify for the program.
What Is Offer Compromise (OIC)?
IRS offers this option that allows you to settle your debt for less than what you owe. Offer in compromise is a perfect option because it gives you a fresh start with the IRS. However, the ultimate goal of this option is to come to a legal agreement for payment that is suitable for both you and the Internal Revenue Service (IRS). Use the Offer in compromise calculator to check your eligibility for the Offer in compromise program. There are three grounds for submitting an offer in compromise.
Doubt about Collectability: When you cannot pay your full tax debt.
Doubt about Liability: When your tax debt has been assessed in error, or the amount assessed needs to be corrected.
Effective Tax Administration: When you can pay your debt, paying the full amount would cause economic hardship or be considered unfair due to exceptional situations.
Eligibility To Qualify For Offer In Compromise
Fill out the Offer in compromise IRS form and describe why you should be considered for this IRS tax relief program. To better determine whether or not you would qualify for this tax relief program, you can use the Offer in compromise calculator.
This tool asks a series of questions to you that will help you determine your eligibility status. Remember that the answer to some questions will immediately make you ineligible. The next section of the IRS offer in compromise form includes basic information like where you live, your country, and your zip code. You will also need to provide the information regarding the total members of your household, the exact amount you owe from IRS tax debt, and the most recent tax year you want to compromise your payment on. Moreover, you also need to fill in information about your total bank balances and financial assets value if any. After that, fill in your sources of income from your job paychecks and dividends.
Once you have correctly filled in all the required information, you will be required to fill in your expenses. It will include your living costs, public transportation, court-ordered payments, vehicle payments, life and health insurance, and child-dependent care costs. The IRS considers all this information. Then decide if you qualify for an offer in compromise.
Payment Options For Offer In Compromise
When you apply for an offer in compromise, you must pay some as filing fees and a first installment payment of your proposed payment plan. Remember, your filing fee depends on the payment option you choose.
There are two payment options available that are as follows:
- Initially, pay a lump sum of 20% of your debt settlement amount. The rest of the amount will pay in five more installments or less.
- The second is to pay periodically. It means you pay an initial amount of your choice and continue to pay the rest in other monthly installments.
There is no doubt that filing for an offer in compromise is one of the best solutions to pay off any tax debts you owe the IRS. Offer in compromise calculator will allow you to check your eligibility to get an offer in compromise with IRS. It will help you to reduce the total amount that you owe. It makes you breathe easier.