What is an Offer-in-Compromise?

 An offer in compromise or a tax settlement program is similar things that allow you to settle your tax debt for a lesser tax amount than what you actually owe to the IRS.

This can be due to any legitimate reason due to which you cannot pay the full tax liability you owe or you are going through serious financial hurdles. The IRS tends to consider a few important factors to consider your situation and check whether you are actually eligible to qualify for an offer in compromise.

The IRS tends to consider your ability to pay, your income, expenses, and your asset equity to see if you are actually eligible for a settlement program. Generally, the IRS tends to approve an offer in a compromise where the settlement amount offered by the taxpayer is what they expect and in a reasonable time period.

It is always a sensible choice to hire a tax settlement services in the USA to file your tax settlement so that you can have higher chances of qualifying, make sure you carefully check the qualifications and details of the firm you choose.

 

Make sure you are eligible:

It is very important to make sure you are eligible for the settlement since the IRS tends to return any filed application offers that are incomplete and do not have all the required tax returns and required payments. 

You would not be eligible for an offer in compromise if you are involved in an open bankruptcy proceeding. You can use the offer-in-compromise pre-qualifier to check your eligibility and prepare yourself a preliminary proposal.

 

 

Submit your offer:

If you are not sure of what documentation and details you will need to submit with your settlement offer then you can also check the offer-in-compromise booklet and read all the instructions and details. But a complete form would include all the details we have jotted down below:

• Form 433-A for the individuals or 433-B for businesses and all required documentation as specified on the forms.
• Form 656(s) - individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656;
• $205 application fee (non-refundable)
• Initial payment (non-refundable) for each Form 656.

 

Select the payment option:

You can choose to submit 20 per cent of the initial payment with your application, in case your offer gets approved you will get written confirmation and then the remaining balance can be cleared in next few payments.

You can also opt for periodic payments and then continue to pay your remaining balance in monthly instalments while the IRS looks into your application form. If your form gets approved you can continue to pay the monthly payments until you are done with the full payment.

 

So, by the end of this article, we hope you have understood what exactly an offer in compromise is and what exactly is needed to be done to consider that you are eligible for the tax settlement offer and you submit all the documents and forms that are required to prove your eligibility.