Make Sure You Qualify for IRS Settlement!
The IRS approves less than 20% of all Offer In Compromises that are submitted. The reason for such a low success rate is:
People are submitting an Offer In Compromise when they do not qualify for a reduction or elimination of their tax debt. This will inevitable result in an automatic rejection.
- Taxpayers (and even so-called Tax Professionals) do not understand how to properly compute the financial figures in a manner that will essentially force the Offer Examiner to accept the Offer In Compromise due to a Doubt as to Collectability.
The IRS Offer Examiners will try to find any reason possible to reject an OIC as they do not want to make it easy for taxpayers to walk away from a tax debt. This would only set a public precedent for people to stop paying their taxes.
Our formula for success is really pretty simple. We are over 95% successful in our negotiations with the IRS due to the fact we do not chase after unattainable outcomes and we always spend the necessary time to confirm someone’s candidacy before ever being hired to pursue a settlement with the IRS. We will review your case and maximize your expenses within your rights as a taxpayer and within the established IRS Standards to determine the type of outcome you can truly expect to receive. If it is determined you do not qualify, we will identify the right strategy in providing you with a desirable outcome.
FREE Consultation with No Risk/No Obligation
We will fully review your IRS case for FREE and truly evaluate all available options to ensure you understand what can be done and how to receive the very best resolution to your particular set of tax issues. Often times, we will even find a better outcome using a different strategy than an Offer In Compromise! Our sole objective is to ensure we find the best solution to your particular set of tax problems.
We invite you to take advantage of our FREE consultation to truly learn what can be done to get your tax issues resolved. You will never be under any kind of obligation to hire us just because we spend the time to fully evaluate your case! Yes, we give out a lot of free advice but we also feel an obligation to assist those who aren’t sure where else to turn or who to trust.
Get Honest and Trustworthy help before you ever hire anyone….The last thing you need is to get bad advice and potentially worsen your position with the IRS.
Learn more about the Offer in Compromise!
- 7 Things You Must Know for 2016!
- Can Anyone Get an Offer In Compromise?
- How Does the Process Work?
- What Happens After an OIC is Submitted?
- 3 Warnings!
- How Can Colonial Tax Consultants Help?
- FAQ for 2016
7 Things You Must Know for 2016!
- The goal of any IRS Settlement negotiation (Offer In Compromise) is to convince the IRS the amount of money they can collect is as small as possible. The IRS does not make it easy to negotiate a settlement and reduce or eliminate existing tax balance, but it is 100% possible if everything is done correctly.
- It usually takes anywhere from 6 to 12 months to negotiate an Offer in Compromise (estimate is based on an experienced tax professional handling case). If an IRS Offer Examiner rejects the initial OIC submission, then it can take over 2 years to go through Appeals! It should be noted that the entire time an individual's Offer is pending, he or she is protected from IRS enforcement action. Wages cannot be levied or garnished while an OIC is pending.
- There is a specific formula that needs to be computed in order to confirm candidacy. You should not proceed with an Offer in Compromise (OIC) until you know you qualify. A glimpse at the formula is shown below in our Infographic. The reason most OIC’s fail is because the computations are not done correctly and the IRS will look for a reason to reject.
- Be very cautious with who you hire. You really only get one shot to submit an Offer in Compromise (If it fails, you have to wait until there is a significant change in your collectability). There are many tax attorneys who don’t even know the OIC formula. They will go through the motions, telling you they did everything they could, but then lose the case and you gained absolutely nothing.
- On tax balances that exceed $20,000, the best advice we can give is to get trusted and reliable help. That's it. You would never attempt to represent yourself in a court of law. The same holds true with the IRS. Once again, you only get one shot at an OIC and you need to make it count before the IRS bullies you into paying more than you really could have settled for had it been handled properly.
- If computed properly, the IRS will accept an offer based upon "reasonable collection potential". This simply means the IRS cannot force us to settle for an amount that is beyond what you can reasonably afford to pay back without causing financial hardship. This is how we ensure each and every client we represent receives the absolute lowest possible settlements. We are aggressive and fight to ensure we always get the lowest monetary settlement before we accept. Quite simply, it is essential that everything is computed and documented in a manner that prevents the IRS Offer Examiner from being able to contest or deny our proposal. It all comes down to knowing how the process works and how to win an Offer In Compromise case.
- More information about the Offer in Compromise program can be found in our FREE Offer In Compromise Guide or in our Frequently Asked Questions (FAQ) listed below.
At a minimum, take advantage of our free consultation and then decide what you want to do once you have the tools and wisdom to make informed decisions.
Can Anyone Get an Offer In Compromise?
The Offer in Compromise Program was established to assist taxpayers who are unable to pay their IRS back tax debt within the IRS Collection Statute of Expiration Date (CSED). You have a right to pay for necessary living expenses before paying IRS Back Taxes. However, the IRS is going to try and collect as much and as quickly as possible as they realize most taxpayers do not fully understand their rights.
If you know how to compute your financials in a manner that prevents the IRS from negating or contesting what is being proposed in a settlement negotiation, you can force the IRS to accept an Offer in Compromise based upon "reasonable collection potential.” This means they can only collect on whatever you show as an ability to pay without causing undue financial hardship.
The goal of any Offer in Compromise negotiation is to convince the IRS that this number is as small as possible, which is the sole objective for each and every case we handle. The reason we can guarantee the lowest settlements possible is because we customize each case to the specific client we are representing.
CAUTION: Beware of companies promising a “pennies on the dollar” settlement. The Offer in Compromise is not for everyone and many requirements must be met before the IRS accepts an Offer In Compromise tax debt settlement.
If you have $15,000 or more in tax debt, see if you qualify for the Offer in Compromise Program!See If I Qualify!
Infographic- How Does the Process Work?
Required Forms & Fees-
- Form 433-A or 433-B found here
- Form 656(s) found here
- Application Fee- $186
- Initial Payment for each Form 656
After you have determined your ability or inability to pay by computing your total settlement amount and filling out the required forms, you will submit everything to the IRS for evaluation.
The IRS evaluates a taxpayer's reasonable collection potential; their willingness to accept an Offer in Compromise is based upon a complete review of your financial situation including the calculations from the Infographic above: income, expenses, assets, and liabilities.
They will only accept an Offer if you can prove to them that you will never be able to pay the debt in full and that the amount you are offering represents the amount that they would reasonably collect through full collection efforts. The complete Offer in Compromise booklet and additional information can be found on the IRS website here.
What Happens After an OIC is Submitted?
- The application fees and payments you submitted for your OIC will go towards your outstanding tax debt (you can choose which debts for which tax years)
- Your collection statute will stop running the moment an OIC is received by the IRS.
- Your collection statute will be extended in accordance with the amount of time it takes to complete the process. The OIC must be accurately prepared to cut down on the time your statute is paused.
- If you are in an Installment Agreement, these payments must continue to be made while the OIC is being reviewed. Best to show an inability to continue making monthly payments prior to submitting OIC.
- Completing an Offer in Compromise on your own is a daunting task, and should not be done without the assistance of a tax professional. It is a 32-page application and the chance of rejection from the IRS without the help of a tax professional is about 80%.
- If an Offer is rejected, you cannot resubmit another OIC unless there is a significant change in collectability. Essentially, you only get one shot. It must be done correctly and in a manner that promotes the best possible outcome.
- Beware of companies promising a “pennies on the dollar” settlement. The Offer in Compromise is not for everyone and many requirements must be met before the IRS accepts a tax debt settlement.
How Can Colonial Tax Consultants Help-
With that said, those we’ve helped who do qualify for this program received astounding results (find out if you qualify for an offer in compromise here). If you qualify, we will settle your debt at the absolutely lowest amount possible! We have settled debts for our clients for less than 1% of what they originally owed. Our team of tax professionals will also help you strategize a backup strategy, to account for any scenario you might encounter with your tax debt, just in case there is another strategy that can be utilized to promote an even better end result. Our sole objective is to make sure each client we represent truly receives the very best possible outcome to their pending tax situation.
The best way to evaluate your chances and confirm the type of approach and outcome you can expect is to call us for a free consultation, or download our free Offer in Compromise 2015 eBook. We offer these services for free as we really do have your best interest at heart. Colonial Tax will spend as much time as necessary evaluating whether an Offer in Compromise is a feasible solution for you and give you no-nonsense answers, all for free.
Do you qualify to settle with the IRS through the Offer in Compromise Program?See if I qualify!
Table of Contents:
- Do I Qualify for an Offer in Compromise Tax Relief Settlement?
- Can a Business file an Offer in Compromise?
- How long does an Offer in Compromise take?
- How is an Offer in Compromise Calculated?
- How long will I have to pay my Offer in Compromise Settlement?
- Will Interest and Penalties accrue if I choose the Periodic Payment option?
- Will an IRS Offer in Compromise appear on my Credit Report?
- Offer in Compromise vs. Bankruptcy
- What is an Effective Tax Administration Offer in Compromise?
- What is a Doubt as to Liability Offer in Compromise?
This is a difficult question to answer without knowing the facts of your case. The best way to find out is to call us and complete a consultation. Through this, we can determine the likelihood of success.
If we do not think the IRS will accept your Offer in Compromise, we provide alternative options that may produce savings on your tax debt.
We always complete this preliminary review of your finances and a detailed review of your IRS account before you ever decide to hire us or we agree to take your case.
There is no up-front cost or obligation for taking advantage of this service and it really does ensure a higher likelihood of success if we are able to fully review your candidacy before ever taking over a case.
In our consultation, we will also provide you with any and all Collection Statute Expiration Dates on your IRS account. It is important to know this information as these dates are necessary when not only computing your candidacy for an OIC but will also indicate which option is best for you and whether an OIC will truly generate the optimal outcome.
We strongly believe our financial review and in- depth tax debt analysis is what separates us from other IRS tax relief firms. It keeps both our Offer success rates and customer satisfaction levels high— if we don't think you can settle, we will tell you up-front and then layout the option(s) that will truly promote the best outcome in resolving your IRS Debt.
We always give honest answers, even if we're not telling you what you want to hear. To learn more about your options, give us a call, email us, or complete the consultation request form on the right and Rick will contact you within one business day.
The IRS has an Offer in Compromise program for businesses called the In-Business Offer in Compromise.
It should be noted this is notorious for being extremely difficult to negotiate, and the rates of success without a tax professional are incredibly low.
The main difference between the In-Business Offer and the Individual Offer, is that the IRS requires a business to, at a minimum, pay the Trust Fund portion of taxes in any settlement (the amount that was withheld from employee paychecks in the case of back payroll taxes).
Most company tax debts are payroll tax debts, so this is usually a problem. It means that your minimum settlement may be as much as 50% of your debt. Whereas, individuals can often settle for less than 1% of what they owe.
Because many businesses cannot afford to pay the Trust Fund portion of the debt, it is common for an Offer in Compromise not to be a viable solution.
Additionally, the IRS will often require a Business Valuation to determine the value of the company and this is not only an expensive process but it is also a very tricky figure to accurately compute.
Typically, a small payment plan or a corporate restructuring is a more feasible solution. While an Offer in Compromise for a business is not impossible, there are usually easier ways to accomplish similar results while saving you a lot of time and money along the way.
It can take from six to twelve months to successfully negotiate an IRS Offer in Compromise. Your assistance in collecting and providing necessary documentation is required in order to get an acceptance as quickly as possible.
If your Offer is initially rejected by the IRS, you may exercise appeal rights to have the IRS take a second look.
If you choose to do so, the complete process can take over two years before the IRS will make a final determination.
Patience and accuracy are key if you want to be successful.
The good news is— for the entire time an Offer is pending, you are protected from IRS enforcement action. This means they cannot levy or garnish your wages while an Offer is pending.
Your tax settlement is calculated using a complex formula taking into account the equity in your assets and projected future income.
The length of time given to a taxpayer to pay off their settlement depends on which settlement option the taxpayer chooses. There are generally two options for repaying an Offer in Compromise tax settlement.
- Cash: Tax debt settlement amount must be paid within 5 months of acceptance.
- Periodic Payment: Tax debt settlement must be paid in equal monthly payments and for as long as 24 months.
If you choose the Cash option, you must submit 20% of your proposed settlement at the time you send in your Offer to the IRS.
If you choose the Periodic Payment option, you must make your proposed monthly payments for the entire time that the Offer is under consideration by the IRS. If they reject your Offer, they keep the monthly payments you've sent in and apply them to your balance(s).
In most cases, we try to offer a settlement low enough that you can afford the cash option.
This ensures that you can send in the 20% down payment, then wait to hear from the IRS (rather than being obligated to monthly payments for the entire time you are waiting for them and risk missing a payment).
No. Whatever settlement the IRS agrees upon is the final number -- your settlement does not accrue interest or any future penalties.
However, if you default on your Offer in Compromise, the IRS will not only rescind the Offer Acceptance, but will also assess you for all of the penalties and interest that would have accrued had a settlement not been accepted.
No. An Offer has none of the negative ramifications of filing bankruptcy.
We should note that if the IRS has already filed a Notice of Federal Tax Lien, this will definitely damage your credit score. However, once your Offer in Compromise negotiation is complete and the tax settlement is paid in full, the IRS tax lien will be released and listed as paid-in-full with the credit bureaus.
The tax lien itself remains on your credit report for 7 years after the date the lien was released, but it will appear as "Satisfied", so creditors will know that you no longer owe this IRS debt.
There are many advantages of the Offer in Compromise over Bankruptcy.
Many IRS tax liabilities are not dischargeable in bankruptcy, meaning that the only option is to set up a payment plan through the courts.
A bankruptcy will stop IRS enforcement including garnishments and levies, but so will an Offer in Compromise; therefore, stopping a garnishment or levy should never be the sole decision-point between choosing which option to pursue.
We generally view an Offer as the preferable option of the two. As an administrative procedure, you never have to go to court or before a Trustee. We can handle the entire process through written filings and telephone conferences directly with the IRS.
Occasionally, there are circumstances where bankruptcy will get you better results. For example, in an Offer in Compromise, the IRS may demand that you liquidate and pay from your retirement account.
Part of our no-nonsense consultation is to consider your unique circumstances and we evaluate this exact question. If we think bankruptcy is going to be a better option, we will tell you.
It costs us business from time-to-time, but if it's what is best for you then we will let you know!
An Effective Tax Administration Offer in Compromise, also referred to as an Offer in Compromise with Special Circumstances, is a process in which you convince the IRS to accept a settlement even though you can pay your debt in full.
These are extremely rare, but in the right situation they must be pursued (and we have successfully done so).
In a normal Offer in Compromise, you are attempting to convince the IRS that the amount you are offering is the most that they can ever hope to collect.
In an Effective Tax Administration Offer in Compromise, you are trying to convince the IRS that you owe the debt, you could fully pay the debt, but because of your unique situation or circumstances it would be unfair to make you do so.
The reasons for pursuing this are so unique from case-to-case that it would take an entire book to explain. Generally, we make arguments of equity or fairness: even though our client can pay back the debt, it would unfair to force them to do so.
A great example of this would be someone who retired and has enough money in a retirement account to pay off their IRS debt but we are able to demonstrate this individual is reliant upon these funds to survive on a month-to-month basis.
A Doubt as to Liability Offer in Compromise is utilized when the Taxpayer does not believe they actually owe the tax debt.
In the standard Offer in Compromise, we argue that you cannot pay the tax debt in full. In a Doubt as to Liability Offer in Compromise, we argue that you do not owe the back tax liability to begin with.
There are two types of Doubt as to Liability Offers in Compromise:
- Examination issue Doubt as to Liability Offer in Compromise: these arise when a taxpayer believes that a mistake was made in through an examination or audit of their tax return that resulted in a tax liability.
These are rare, because the IRS has other avenues available to contest these assessments through an audit reconsideration. This is something we can evaluate and determine which approach is best suited to your particular situation.
- Legal or factual issue Doubt as to Liability Offer in Compromise: The most common Offer in Compromise submitted under these grounds will be in response to a Trust Fund Recovery Penalty Assessment. Here, the taxpayer’s Offer in Compromise must lay out both legal and factual grounds as to why their assessment of the Trust Fund Recovery Penalty was improper.
This is a useful tool when clients have missed their Appeal window(s) to protest tax assessments and no remaining options exist to fight those assessments. Collection on Trust Fund Recovery Penalties are a priority of the IRS and we handle these types of cases on a very frequent basis due to the aggression of the IRS and the real importance in making sure this type of tax balance is addressed properly. If you have been assessed, or are in the process of being assessed, with a Trust Fund Recovery Penalty, it is important that you reach out to us to discuss.
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