Thanks to many extenuating circumstances, such as The Great Recession and the fact that millions of American citizens are living abroad and not paying taxes, the IRS has every incentive to collect what’s owed to them. They’re even willing to strike a deal, in some cases, as can be seen with the offer in compromise program.
What Is An Offer In Compromise?
An offer in compromise is a program offered by the IRS, under the code 26 U. S. C. subsection 7122, which allows certain qualifying individuals to negotiate an unpaid tax debt for less than the owed amount. An offer in compromise is offered when it seems in the best interest of both the taxpaying individual and the IRS.
Qualifying For An Offer In Compromise
Before the IRS can consider an offer in compromise solution, first it must be determined whether or not an individual is eligible.
The IRS considers four main qualifiers, to determine eligibility, which are:
The IRS will consider an offer in compromise if it seems like it will yield the most possible money in a reasonable amount of time.
The IRS asks that you consider all other payment options, before filing for an OIC.
Some questions to ask yourself, to help determine if you are eligible for the OIC program:
Getting clear on what the IRS expects will help save valuable time, energy, and resources when filing for an offer in compromise.
Benefits Of An Offer In Compromise
There are several benefits to opting for an OIC:
Offers In Compromise More Accessible Than Ever
Although OICs have been available for decades, struggling taxpayers have had difficulty taking advantage of the program, due to strict criteria. As of 2014, however, the IRS has lowered their standards significantly, refactoring the reasonable collecting potential, or RCP, to be more inclusive. Other factors are also being taken into account, when calculating RCP, such as age, health, marital status, number of dependants, education, and occupational training.
Some benefits of the new RCP definition include:
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