Cash Offer in Compromise
Taxpayers
must pay cash OICs within 90 days of
acceptance. Taxpayers should offer the
realizable value of their assets, plus
the total amount the IRS could collect
over 48 months of payments (or the
remainder of the ten-year statutory
period for collection, whichever is
less).
Note: The IRS requires
full payment of accepted doubt as to
liability OICs at the time of mutual
agreement of the corrected liability. If
taxpayers are unable to pay the
corrected amount, they must also request
compromise on the basis of doubt as to
collectibility.
Short-Term Deferred Payment
Offer in Compromise
This payment plan requires
taxpayers to pay the OIC within two
years of acceptance. The OIC must
include the realizable value of the
taxpayer's assets, plus the amount the
IRS could collect over 60 months of
payments (or the remainder of the
ten-year statutory period for
collection, whichever is less). The IRS
may file a Notice of Federal Tax Lien on
tax liabilities compromised under
short-term deferred payment OICs.
Taxpayers can pay the short-term
deferred payment plan in three ways:
Plan One - Full payment
of the realizable value of the
taxpayer’s assets within 90 days from
the date the IRS accepts the OIC, and
payment within two years of acceptance
of the amount the IRS could collect over
60 months (future income), or the
remaining life of the collection
statute, whichever is less.
Plan Two
- Cash payment for a portion of the
realizable value of the taxpayer’s
assets within 90 days from the date the
IRS accepts the OIC, and the balance of
the realizable value, plus the amount
IRS could collect over 60 months (future
income), or the remaining life of the
collection statute, whichever is less,
within two years of acceptance.
Plan Three
- The entire OIC amount in monthly
payments extending over a period not to
exceed two years from date of acceptance
(e.g., four payments within 120 days of
acceptance). For example, on a
short-term deferred payment total offer
of $16,000, taxpayers might propose to
pay their realizable value of assets
(e.g., $13,000) within 90 days of
acceptance and the amount of their
future income (e.g., $50 per month for
60 months, or $3,000) over 6 monthly
payments of $500 each, beginning with
the first month after acceptance.
Deferred Payment Offer in
Compromise
This
payment plan requires taxpayers to pay
the OIC amount over the remaining
statutory period for collecting the
tax. The OIC must include the
realizable value of the taxpayer's
assets, plus the amount the IRS could
collect through monthly payments during
the remaining life of the collection
statute. The IRS may file a
Notice of Federal Tax Lien on
tax liabilities compromised under
deferred payment OICs.
For wage earners and self-employed
individuals who want to submit a
deferred payment OIC, the IRS will help
them determine the future income
amount. To compute this amount, the IRS
must calculate the remaining time left
on the collection statute for each
period of the tax liability. Taxpayers
can call the IRS at 1-800-829-1040 to
get assistance with this calculation.
Taxpayers can pay the deferred payment
plan in three ways:
Plan One - Full payment
of the realizable value of the
taxpayer's assets within 90 days from
the date the IRS accepts the OIC, and
taxpayer's "future income" in monthly
payments during the remaining life of
the collection statute.
Plan Two - Cash payment
for a portion of the realizable value of
the taxpayer's assets within 90 days
from the date the IRS accepts the OIC,
and taxpayer's monthly payments during
the remaining life of the collection
statute for both the balance of the
realizable value and the taxpayer's
future income.
Plan Three - The entire
OIC amount in monthly payments over the
life of the collection statute. For
example, on a deferred payment OIC with
7 years (84 months) remaining on the
statutory period for collection, and a
total offer of $25,000, taxpayers might
propose to pay their realizable value of
assets (e.g., $10,000) within 90 days,
and their future income (e.g., $179 per
month for 7 years, or $15,000) in 84
monthly installments of $179.
Alternately, they could also pay the
same total $25,000 OIC in 84 monthly
installments of $298. |
