Offer In Compromise

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Tax Debt Strategies

Here are several ways you can ease the pain of your IRS problems.

1. Installment agreement: a monthly payment plan for paying off the IRS.

    

2. Partial payment installment agreement: a fairly new debt management program where you have a long term payment plan to pay off the IRS at a reduced dollar amount.

    

3. Offer in Compromise: a program where you can settle your tax debts for less than what you owe. Requires making a lump sum or short term payment plan to pay off the IRS at a reduced dollar amount.

    

4. Not currently collectible: a program where the IRS voluntarily agrees not to collect on the tax debt for a year or so.

    

5. Filing bankruptcy: discharge your tax debts under the strict rules of a Chapter 7 or 13 bankruptcy petition.

There's no "secret sauce" in paying off tax debts. These are the only five ways of getting out from under the IRS' aggressive debt collection tactics. If a tax pro promises you that you can save "pennies on the dollar" through an offer in compromise, that person is probably more interested in selling you something you don't need instead of focusing on your unique financial situation and determining what the best course of action is for you.

 

Each question below is linked to its answer and all answers appear further down. Please click on a question and you will be taken to the answer.   General 101  What is an offer in compromise (OIC)? 102  What are the requirements for an OIC?   Revised 8/2/2004 103  How do I complete an OIC?  Revised 8/2/2004 104  When does a Form 433, Collection Information Statement, need to be completed? 105  Are the forms available on-line? 106  What forms are submitted to request an effective tax administration OIC? 107  I qualify for an installment agreement, can I still submit an OIC? 108  The IRS recently levied my bank account. Will the levy proceeds be returned if I file an offer in compromise? 109  Can I stop sending payments as part of my approved installment agreement once I file an offer in compromise? 110  Can taxes be settled by offering pennies on the dollar? 111  Can I file an offer in compromise to delay collection action? Application Fee 201  What is an offer in compromise user or application fee? 202  How much is the application fee and when does it begin? 203  Who will have to pay this application fee? 204  What method of payment does the IRS accept? 205  Can I send cash as payment for the application fee? 206  Can I send one check to cover both the application fee and OIC amount? 207  Can a tax practitioner who represents a number of clients and files multiple OICs combine several application fees into one check? 208  What happens if I submit an application fee and find that I have insufficient funds in my account to cover the check? 209 Will payment of the application fee reduce the OIC amount? 210 Will the application fee create an additional financial hardship on taxpayers who are already having payment problems? 211 What does the IRS review when I submit my "Offer in Compromise," Form 656?    Revised 8/2/2004 212  What happens to my fee if the OIC is considered not processable? 213  Why does the IRS require the July 2004 version of Form 656, "Offer in Compromise," package?    Revised 8/2/2004 214  How do I know if I qualify for the income exception?    Revised 8/2/2004 215  What do I need to do if the OIC Application Fee Worksheet shows that I qualify for the income exception?    Revised 8/2/2004 216  What happens if I submit the Form 656-A and the IRS later says I made an error and do not qualify for the poverty guideline exception? 217  Does the poverty guideline exception apply to businesses? What happens if I do not submit the OIC application fee with the OIC Form 656? 218  How is the application fee collected? 219  How many Forms 656 must I complete if my spouse and I are submitting one offer to compromise the same joint liability? How many application fees must be attached? 220  How many Forms 656 should be filed when the taxpayers are divorced, separated, or/married, but living apart? How many fees must be attached in these situations? 221  When a married couple owes a joint liability and one spouse also owes an individual (non-joint) liability, how many Forms 656 are required? 222  How many Forms 656 are required from a married couple who owe joint income tax, plus the husband owes an individual year before he was married and a business liability, and the wife owes an individual year with her prior spouse? How many application fees will be required? 223  How many Forms 656 are required if you have an individual who owes tax and who also owes a partnership debt as a general partner or corporate debt from a closely held corporation? How much would the application fee be? 224  What will happen if the IRS accepts an OIC for processing, along with the $150 application fee, but then requests additional Forms 656 be submitted with additional $150 fees, and the taxpayer fails to respond? 225  What happens to the Form 656 and application fee after I send it to the IRS? 226  Are there any instances when the application fee will be applied against the amount of the offer or refunded to me after the OIC has been accepted for processing? 227  What if my OIC is not accepted, will the application fee be refunded to me? 228  Where can I find more information on the OIC application fee?    Revised 8/2/2004Offer in Compromise Review of Sites Processing Your OIC 301  What happens if an OIC is submitted using the wrong forms? 302  Will the submission of inaccurate Form 656 and Forms 433-A/B affect the timely disposition of my case? 303  What are the common errors when preparing an offer in compromise? 304  What happens if I miscalculate my OIC or do not offer an amount equal to my reasonable collection potential? 305  What are the National and Local Standards and how are they considered in evaluating an OIC? Offer Determinations 401  What happens if the IRS accepts an OIC? 402  What happens if the IRS does not accept an OIC? 403  How much interest am I going to pay if my offer is accepted? 404  Will I be entitled to receive tax refunds once my OIC is accepted? 405  Can I designate any payments once my OIC is accepted? 406  Is a tax lien released when an OIC is accepted? 407  What happens if I do not meet all the terms of my accepted OIC? 408  What happens if I default my OIC?   Revised 8/2/2004 409  What happens if I do not file my tax return next year? Back To Top