How You Can Qualify for an Offer in Compromise
May 3, 2021
According to the Internal Revenue Service Data Book, more than 11 million Americans owed over $125 billion in combined past-due taxes, interests, and penalties in 2019. For individuals who owe back taxes, one of the available options to get tax relief is through an "offer in compromise" (OIC). This involves proposing a settlement offer to the tax authorities, which allows you to offset your tax debt for less than the amount owed. If you owe the IRS and need to understand how to qualify for an offer in compromise, consulting with an experienced Florida tax law attorney is crucial for proper guidance.
At Zuckerman Law, LLC, I have spent 30 years offering comprehensive legal guidance and strong advocacy to clients in tax law-related matters. I am available to evaluate your tax records, help you understand your possible options to get tax relief and determine whether you qualify for an offer in compromise. My firm is proud to represent tax players in Fort Lauderdale, Broward County, and throughout South Florida, including Miami-Dade, Palm Beach, and Collier counties. Call me today to schedule a consultation to learn more.
What is an Offer in Compromise?
An offer in compromise allows taxpayers to get tax relief or settle their back taxes for less than the total amount owed. This involves negotiating a settlement agreement with the tax authorities to offset your past-due taxes by paying a reduced sum. An offer in compromise may be right for you if:
You owe more than you can pay
Paying the back taxes creates a financial hardship
Offer in compromise allows you to choose between two payment options – periodic payment and lump sum cash.
Periodic Payment: Periodic payment allows you to offset the agreed-upon reduced sum through monthly installments. You will submit your first payment with your application and continue making monthly payments until the past-due taxes have been fully paid.
Lump-Sum Cash: The lump-sum cash option allows you to submit an initial payment of 20% of the agreed-upon amount with your application. You will pay the remaining balance in, at most, five payments.
However, the criteria to qualify for an offer in compromise are very strict. The IRS will consider the following set of facts and circumstances before you can be approved for an offer in compromise:
Your ability to pay
Your monthly income
Your expenses & financial obligations
Your asset equity
Whether there is a genuine dispute regarding the amount you owe
Whether paying the full amount puts you in financial distress
Understanding the Process
An offer in compromise starts with the taxpayer proposing a settlement offer to the IRS using Form 656. The amount you're offering must be equal to or greater than your asset value or equity. To determine your ability to pay your past-due taxes, you will need to complete and submit Form 433-A. Additionally, you may have to submit an initial amount with your application, depending on your preferred payment option.
Your application for an offer in compromise is automatically accepted if the IRS doesn't make a determination within two years. If your offer is rejected, you may appeal the rejection within 30 days. An experienced attorney can review your situation and determine whether you meet the requirements for an offer in compromise.
Work with an
Experienced Tax Attorney
Filing back taxes is important to mitigate or avoid late payment penalties and accumulation of interest charges. While complete IRS debt forgiveness is not a realistic option, an offer in compromise may be a more reasonable alternative to deal with your past-due taxes. If you're seeking IRS debt forgiveness through an offer in compromise, consulting with a knowledgeable Florida tax law attorney is imperative for detailed guidance and to determine the best course of action.
At Zuckerman Law, LLC, I have devoted my career to handling tax law cases and guiding clients through the complex procedures involved in paying back taxes. As your legal counsel, I can evaluate your tax records and determine whether an offer in compromise may be right for you. I will help prepare your documentation, submit your application, and guide you through every process involved from start to finish. Even if your application is rejected, I can help appeal the rejection or explore other available options to achieve tax debt relief.
Call my firm — Zuckerman Law, LLC — today to schedule a case evaluation with an experienced tax law attorney. I can offer you the experienced legal counsel, support, and advocacy you need to make critical decisions. I proudly serve taxpayers in Fort Lauderdale, Florida, and throughout South Florida including, Miami, Boca Raton, North Miami Beach, and Hollywood. Call me today to get started.