Offer in Compromise – Settling for Less

Think Uncle Sam never settles for less than what he is fully owed?  At times he will.  You can make an Offer in Compromise (“OIC”) to resolve your tax debt for a dollar amount much less than the total you owe. If the IRS doubts that you are in the position to pay the full amount showing due, or if there is a question concerning whether or not you actually owe the amount showing due, Uncle Sam may accept the OIC.

Sounds ideal, right?

The OIC is indeed a boon to many taxpayers. But don’t believe the hype playing over the air that certain businesses can make your entire tax debt disappear with a simple wave of the magic OIC wand.  Consider carefully before contracting with these types of companies – recently many of them have been prosecuted for false advertising and unethical business practices.  Also think hard before attempting an OIC by yourself.

Why?  Successful submission of the OIC can be a tricky affair. Arriving at a settlement amount agreeable to both the IRS and the taxpayer demands great familiarity with IRS processes, including directives, parameters, and general regulations:

• The IRS bases its acceptance of the OIC on a large number of factors, including your potential earnings and cost of living allowances. In general, the OIC most likely to be accepted is the one structured around the lowest proposed dollar payment which the IRS is likely to accept – anything lower, and the IRS will decline the offer.  A taxpayer not familiar with the IRS’s methods of calculations may blow the chance to achieve settlement by underestimating what the IRS considers an adequate settlement agreement.
• Financial documentation, including bank statements, all organized according to a specific set of criteria, must accompany your offer. Should your OIC be rejected, disclosure of certain financials to the IRS can be damaging in the long run.  Preparing these documents for IRS review needs a legal analyst’s awareness of what data the IRS might use against you in the future.
• Other complicated issues come into play with the OIC as well.  For instance, you must become fully compliant with the IRS concerning all past-due filings, and you must remain compliant with current filings for the next 5 years.
• Interest and penalties continue to accrue during the consideration phase.
• And the IRS knows that these prerequisites to submitting an acceptable OIC prove challenging for the taxpayer.  Thus, if you are not represented by a tax attorney, sometimes IRS agents will offer to complete the OIC for you. Watch out for this trap.  It may end with you caught in Uncle Sam’s snare, as the IRS agent will almost certainly include in the OIC damaging information you inadvertently disclosed during the interview.

For all these reasons, if you’re struggling to pay off large sums of past-due taxes, penalties, and interest, consult with our team of tax professionals at Law Offices of Christy Lee, P.C.  We use sophisticated techniques to ensure the best possible settlement for your tax case, and we dedicate ourselves to alleviating the stress associated with heavy tax debt. Our tax boutique:

• Consults with you about your situation and reviews the correspondence between you and the IRS.  Then our team of professionals assesses the best approaches to lessening your IRS liability and discusses with you the possible ramifications, both positive and negative, of each.  Together, we decide about moving forward concerning your OIC.
• Examines your financial records, including expenses, income, and past tax returns, so that we can arrive at the optimum proposed settlement amount, keeping your monetary obligations and assets in mind while we customize your plan.
• Screens and redacts documentation for presentation to the IRS.
• Prepares and submits all required forms and documentation concerning the OIC to the IRS.
• Communicates with the IRS about your OIC and the preferred method of payoff of the settlement amount.
• If necessary, appeal the IRS’s decision if an OIC is rejected.
• And counsels you concerning preferred record-keeping methods, alleviating the possibility of falling out of compliance with the IRS in the future and thus voiding the OIC.

Our tax boutique doesn’t make promises that Uncle Sam will tip his hat to you, then vanish without a word about your tax bill just as soon as you step into our office.  Instead, Law Offices of Christy Lee, P.C., focuses on reaching a practical, achievable, successful resolution of your tax case.  Give our tax professionals a call to see how we can assist you in lowering your tax liability by submitting an OIC on your behalf.