Expert Advice from Dean Michael the Tax Doctor About IRS Tax Settlement Program (Offer in Compromise)
(PRWEB) September 21, 2017 -- They say there are two things in life you can't avoid, death and taxes. But, every year thousands of people fail to pay their due to the IRS. Today, the television, radio, magazines, and newspapers are filled with ads from companies who claim they can help you settle your tax debts for a fraction of what you owe. The program all these advertisements are referring to is the IRS Offer in Compromise program or OIC.
The Number of Debtors Continues to Go Up
According to a report issued by the GAO (U.S. Government Accountability Office), by the end of the fiscal year 2011, individual income earners owed the IRS $258 billion in unpaid taxes, while businesses owed $115 billion and these numbers have continued to increase each year. Although these numbers are staggering, the largest percentage of individuals owed less than $5,000 each. The Offer in Compromise program may be a good way for certain individuals to settle their debts with the IRS, but it is not a one-size-fits-all solution.
What is the Offer-in-Compromise Program?
According to the IRS, "An Offer in Compromise (offer) is an agreement between the taxpayer and the IRS that settles a tax debt for less than the full amount owed. The program provides eligible taxpayers with a path toward paying off their tax debt and getting a fresh start." As a matter of fact the IRS has renamed this program calling it the FRESH START PROGRAM. The program has a simple aim, which is for both you and the IRS to come to a workable compromise. The compromise will allow the taxpayer to pay significantly less in back taxes than what is truly owed. The taxpayer can pay it off in one lump sum or make monthly payments.
The taxpayer must Qualify for OIC
While the Offer-in-Compromise program certainly sounds like a winner for anyone who is seriously behind on their taxes, it is not as simple as filing the right paperwork to be accepted into the program. To be accepted into the OIC program, your application will be fully examined and assessed by the IRS.
To qualify for the Order-in-Compromise program, you must:
• Have filed all legally required tax returns
• Have a tax bill in your possession which includes one or more of the tax debts included in your offer
• Have paid all your required estimated taxes for the current tax year
• Business owners must have paid their current federal tax quarterly deposit
This all sounds straightforward and in theory should be pretty simple for anyone who is significantly behind on their taxes. But the OIC only works if the IRS determines that you are truly eligible for the program, have the ability to pay the lump sum amount offered, or can make the agreed upon payments. But with the pros of this program, there are also a few cons you should be aware of as well.
The Pros
• Once the taxpayer is enrolled in the program, he or she can put their tax worries behind them and get a fresh start with IRS.
• No more worrying about the IRS seizing bank accounts or garnishing wages.
• The IRS will release any tax liens on the taxpayer's credit thereby improving their, making it easier to buy a house or a car.
The Cons
• The IRS gets to examine every aspect of the taxpayer's finances.
• They must tell them everything such as where they bank, where they work, and list all of their assets.
• The 10-year clock on collecting back taxes gets put on hold during the investigation, so if the taxpayer is almost at the end of this time frame, it might be better to wait it out.
• Once the OIC is put in place, the taxpayer is on IRS probation, meaning they must faithfully file and pay all their taxes. If they default, their OIC goes out the window.
The Number Who Qualify is Very Small
Despite all the ads from lawyers and "Tax Settlement Companies" who want everyone to believe virtually anyone can qualify for the Offer-in-Compromise program, qualifying for this program is not easy. In fact, less than 50% of all applications are accepted, so don’t believe the hype. There is a specific equation used by IRS to determine a taxpayer’s ability or inability to pay. This is determined by income and by assets. For those that qualify, the OIC is an excellent way to settle with the IRS, pay your back taxes, and clear any tax liens on their credit record. The good news is there are reputable tax resolution companies such as Tax Help MD who can provide individuals and businesses with the expert advice needed to navigate through the muddy waters of applying for an Offer in Compromise. They may also be able to she dome light on other IRS programs they could qualify for if OIC is not a viable option.
Final Thoughts
While most of us do our best to pay our taxes every year, there is always the chance anyone could fall behind and end up owing the IRS a significant amount of back taxes. Programs like the OIC are designed to help those who can demonstrate they qualify for the program and possess the ability to pay the amount owed.
If you owe back taxes and need more information, you can start by contacting Tax Help MD:
Call 1-888-557-4020 or visit us online at http://www.MyTaxHelpMD.com.
Dean Michael, Tax Help MD Inc, http://www.MyTaxHelpMD.com, +1 (561) 899-4151, [email protected]
Share this article