Offer In Compromise (IRS Settlement Offer)
For many people who are struggling financially, their tax debt can prove to be overwhelming and burdensome. To address these concerns, in 2012 the IRS maintained its Offer in Compromise program which allowed those with tax debt to settle it for less than the full amount owed. By gaining a full comprehension of the OIC IRS Settlement Offer program, you will be better informed about the choices available to you.
What Exactly is An Offer In Compromise?
The Offer in Compromise Program is a program offered by the IRS which allows the taxpayer to make an IRS settlement offer for the past due debt they have accrued. They will be able to settle their outstanding tax debt for a reduced amount in the event that they are experiencing financial hardship. Offers which are accepted are those that are reflective of the amount the IRS would normally collect in a reasonable amount of time.
When deciding whether to accept an IRS tax settlement offer, a few different factors are considered. These include the taxpayer’s expenses, ability to repay the loan, income, and the amount of equity in assets.
What Changes Has The IRS Made to the OIC Program?
The changes to the OIC program include differences in the way future income is calculated when determining eligibility for the program. Instead of considering 4 years income, they now only consider one year of future income if the tax debt will be repaid within 5 months. With offers requiring repayment within 6 to 24 months, the IRS will review 2 years of future income instead of the previous 5. Another change is that income producing assets will no longer be included when calculating income amounts for small businesses.
Additionally, the amount of Allowable Living Expenses which the IRS uses is now altered. The new change allows people to include more expenses under the National Standard Miscellaneous Allowance.
In What Way Will The Changes Benefit Taxpayers?
The new changes bring many benefits to taxpayers including an increased likelihood of their IRS settlement offer being accepted. In addition, they can usually settle their accounts for less than they previously would have under the past OIC regulations. Individuals filing bankruptcy who have outstanding tax debt will find the new rules more beneficial.