If you owe money to the IRS, you know that it can be a scary experience that often leads people to feel stressed out and confused.
Thankfully, an IRS settlement referred to as an “offer in compromise” may help ease the burden of owing money to the government.
Read on to learn more about this option and how it might help you get some financial relief and peace of mind.
What is an Offer in Compromise?
An offer in compromise or OIC is a lump-sum payment plan or periodic payment plan that you can use if you owe money to the IRS. You must apply for this type of IRS settlement and then you’ll be required to make a 20% downpayment if you choose the lump sum plan.
If your OIC request is approved, you’ll have to settle the rest of your debt within five subsequent payments. Those who choose the periodic repayment plan can make more long-term and often smaller monthly payments.
The IRS will not contact you if you qualify for an offer in compromise. If it’s something you think may help you, then you’ll need to reach out to the IRS and apply.
Qualifying for an IRS Settlement
It’s important to note that there is no guarantee the IRS will accept your OIC application. It’s a good idea to consult with a professional that specializes in oic tax relief for help.
There are several reasons why the IRS may deny your OIC request. If you submit documentation that causes the IRS to doubt you’ll be able to make the payments, your application could be denied. For example, if your income is too low or you’re unemployed, the IRS will likely assume you won’t make your payments.
It’s important to read the application and all forms carefully before you submit them to the IRS to ensure that everything is accurate and up to date. Even a small mistake or oversight can cause your application to be denied.
There is a $186 fee required when submitted an OIC application. You should also include your first payment or upfront lump-sum payment, which is typically around 20% of the total debt you owe.
The application fee is non-refundable, but any lump sum payments you make will go toward your total balance. Keep in mind that you should continue to make payments to the IRS while your application is in process.
If the IRS rejects your request, you have 30 days to appeal their decision. This IRS tax settlement is a bit complicated, so it’s best to consult with a professional who can guide you through the process.
Making a Compromise
Understanding how to navigate the IRS settlement process can save you money if you owe past-due taxes and penalties. Consider making the offer in compromise only if you’re confident that you’ll be able to abide by the terms.
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