If you're facing IRS debt, an Offer in Compromise (OIC) may be your best chance to settle your debt for less than what you owe. An OIC allows taxpayers who can't fully pay a tax liability to agree with the government on a lesser amount that must still satisfy the entire debt.
While this is an attractive option, it also requires businesses and individuals who are interested in pursuing an OIC to make sure they understand how it works and if their offer has been accepted by the Internal Revenue Service (IRS).
Understanding whether or not the IRS accepted your Offer In Compromise is an incredibly important step — after all, without official acceptance from the agency, nothing else will move forward! So today we'll be discussing some of the necessary steps to verify whether or not your OIC was accepted by the IRS.
An Offer in Compromise (OIC) is one of four IRS relief programs that paves a way for taxpayers to resolve their tax debt with the Internal Revenue Service (IRS) for less than the full amount owed. It is a voluntary agreement between the taxpayer and the IRS that can be an attractive option for those who are unable to pay their tax debt in full.
There are several reasons why someone might consider submitting an OIC to the IRS. Often, taxpayers cannot settle the entire amount of their tax debt due to financial hardship. In such cases, an OIC can bring a sense of relief by allowing them to pay only what they can realistically afford in accordance with their current fiscal circumstance.
Other reasons for considering an OIC may include disputes over the amount of tax owed, or situations where paying the full amount of the tax debt would cause undue economic hardship or be unfair and inequitable.
It's important to note that submitting an OIC does not guarantee that the IRS will accept the offer. The IRS will carefully evaluate the offer and consider factors such as the taxpayer's income, expenses, and assets in order to determine its acceptability.
The IRS will consider an OIC if the taxpayer meets certain qualifications outlined in the Internal Revenue Code. Generally speaking, these requirements include:
The taxpayer must have filed all required tax returns.
To ensure tax compliance with all applicable regulations, taxpayers must make the necessary estimated payments for the current year.
Taxpayers must be up to date on all filing and payment requirements.
The taxpayer must not be in an open bankruptcy proceeding.
The IRS will also consider other factors, such as the taxpayer's ability to pay the full amount of debt due and their compliance with other tax laws. In addition, depending on the type of OIC submitted, there may be additional requirements that need to be met.
The process of submitting an OIC involves several steps, including gathering documentation, filling out the appropriate forms, and submitting the offer to the IRS.
Before submitting an OIC, the taxpayer will need to gather all necessary documentation. When submitting evidence to the IRS, taxpayers must include all financial documents that prove their inability to pay such as last year's tax returns, income statements, and bank records.
Additionally, other supporting documentation of any financial distress caused by reduced profits or increased costs may help qualify for further assistance in settling the full amount owed.
Filling Out The Forms:
Once the necessary documentation has been gathered, the taxpayer will need to fill out the appropriate forms for submitting an OIC. There are several different forms that taxpayers may need to complete, depending on their specific circumstances:
Form 656, The most common form, which is used to make an OIC.
Form 433-A (for individuals)
Form 433-B (for businesses)
Submitting The Offer:
Once the forms have been completed and the necessary documentation has been gathered, the taxpayer can submit the OIC to the IRS. The taxpayer will need to include a non-refundable application fee with the OIC unless they are currently experiencing financial hardship. The OIC can be submitted online using the IRS's Online Payment Agreement application, or it can be mailed to the appropriate IRS office.
It's important to note that the OIC process can be complex, and taxpayers may want to consider seeking professional help to ensure that their offer is complete and accurate. This can increase the chances of the OIC being accepted and help the taxpayer resolve their tax debt more efficiently.
How Can I Know If The IRS Accepted My Offer In Compromise?
Once you have submitted an Offer in Compromise to the IRS, you will receive a notification if your offer has been accepted or rejected. If the IRS accepts your offer, you will receive a closing letter and a notice of acceptance. The closing letter will explain the terms of the agreement that must be adhered to per the Offer in Compromise. Read through it carefully as it contains important information regarding your payment obligations.
Additionally, make sure that you save all documents and correspondence related to your Offer in Compromise for future reference. You may want to double-check with an accountant or lawyer for assistance with understanding the legal aspects of this agreement if needed. Staying organized and following through on payment requests from the IRS are essential for keeping your compromised offer terms valid.
The Offer in Compromise program may be the best solution for you if you cannot pay your tax debt in full. Submitting an Offer in Compromise is a multi-step process and it can take up to six months for the IRS to make a decision on your offer. You will be notified by mail if your offer is accepted, rejected, or returned with additional information needed.
So how will you know if IRS accepted your Offer In Compromise? The answer is simple: you'll receive a Notice of Acceptance once the terms of your offer have been fulfilled. If you have any questions about offers in compromise or need assistance submitting one, please don't hesitate to contact us. We're here to help!