Apply For Offer In Compromise to Settle Your Tax Debts

September 13, 2021 | Offer in Compromise

Apply For Offer In Compromise to Settle Your Tax Debts

Tax debts are always an unwanted headache for taxpayers. They are a specific amount of tax that is payable to the Internal Revenue Service. They increase over time with the addition of interest and penalties. If they are not paid as soon as possible, they get double and that hurts more.

Tax debts are due to not paying taxes by the deadline. And this happens due to many different reasons such as inability to pay taxes, family crises, long-term illness, etc. 

If you also have tax debts and are looking to settle it with the Internal Revenue Service, then there are some specific provisions for you. You can apply for an Offer In Compromise by proving realistic reasons with proofs why didn’t you pay your taxes on time. If the IRS officers find your reasons and tax debt settlement request genuine, then they can accept it and provide your exemption on your tax debt to some extent. On the other hand, if they don’t get convinced with your request and reasons, then they can reject it. And once they reject your Offer In Compromise application, you will only be able to appeal, not reapply it. Therefore, it is important to carefully proceed with your Offer In Compromise application.

What Are The Options For Applying Offer In Compromise?

Chiefly, you have two options for applying Offer In Compromise for tax debt settlement that are:

Apply it Yourself- You can apply it by yourself. All you need to do is check your eligibility first and then submit the completed and signed application forms 656, 433-A (OIC), 433-B (OIC). However, it is not that easy as it sounds. It is a very complicated process. You need to fill all the details correctly in your application forms and then review it before submitting it. Make sure any single error does not occur in your forms because it can cause rejection of your application. 

You should choose this option only when you have deep knowledge and vast experience of dealing with tax matters. When you know how to smartly put up reasons so that the IRS officers get convinced and allow you a certain exemption on tax debts. When you have a deep understanding of the application procedure. If any of these is missing, you should prefer the second option. 

Hire a Professional Tax Attorney or A Tax Law Firm- Generally, taxpayers choose this option as it is the safest and reliable option. You should choose this option for applying NYS Offer In Compromise and getting guaranteed benefits.

A professional tax attorney is a law graduate who is very well-versed with the legal procedures and different tax matters. He knows how to handle different types of tax dealings. He knows how to represent a tax matter to the IRS officers so that maximum advantage can be obtained. He knows how to interpret the law in your interest in maximizing your benefits and minimizing risks, penalties, and interest on tax debts. He is an experienced law graduate. You can hire him for applying Offer In Compromise on behalf of you. All you need to do is approach a highly professional certified tax attorney or a tax law firm, finalize your deal, and hand over your case to him.

Make Sure You Are Eligible To Apply For Offer In Compromise

Before you get started to proceed with your Offer In Compromise application, you need to make sure you are eligible for applying for it. If without fulfilling eligibility criteria you apply for Offer In Compromise (OIC), then the IRS will return your application with your application fee.

To check the eligibility requirement, you can use Offer In Compromise Pre Qualifiers. You can apply for OIC if:

  • You have filed all required federal tax returns.
  • You have made all the required estimated tax payments. 
  • You are not in an open bankruptcy proceeding. 
  • You are self-employed, have employees, and have submitted all required federal tax deposits. 

How to Apply?

You need to fill these application forms by providing accurate information and all the required documents (as specified in the forms). Once you complete these forms, you will need to submit them. Then you will be asked to pay your non-refundable application fee worth $205. You need to pay that through a specific payment option from Lump Sum Cash and periodic payment.

Acceptance and Rejection Of Application

After submission of your application, the IRS officers will evaluate your application. If they get convinced with the reasons you provided to defend why you didn’t pay your taxes on time, then they will accept it and inform you by mail or via other mediums of communication. In case of rejection, you will get a notice with reasons for rejection./p>

If You Are Agree or Disagree With the Outcome

If you agree with the rejection of your application, then you will have to pay the full amount of your tax debt to the IRS. While on the other hand, if you disagree with the given reasons for the rejection, you can appeal within 30 days of rejection following the instructions specified in your form. You will need to apply for Request for Appeal of Offer in Compromise, Form 13711 (PDF).

Attorney Timothy Hart

Timothy S Hart, the founding partner of the tax law firm of Timothy S. Hart Law Group, P.C. is both a New York Tax Lawyer & Certified Public Accountant. His area of expertise includes innovative solutions to solve your Internal Revenue Service and New York State tax problems, including tax settlements through the Federal and New York State offer in compromise programs, filing unfiled tax returns, voluntary disclosures, tax audits, and criminal investigations. [ Attorney Bio ]