At Rush Tax Resolution, our skilled team can help provide tax relief for all avenues of IRS issues.
We may be able to save you $1,000’s by qualifying you for an Offer in Compromise. Find out NOW! Complete the form below. View chart of our actual results – we’ve saved our clients millions of dollars!
Reduce Your IRS Debt
Are you in over your head with the IRS? Worried about a debt you might not ever get to pay off? Is the IRS asking you to settle a tax liability you simply don’t have the means to tackle right now? Don’t worry – all hope is not lost. Depending on your circumstances, you can seek partial debt forgiveness through an offer in compromise.
It’s easier said than done! But if you play your cards right, meet the right prerequisites, and work with us, we can help you navigate through the IRS’ requirements for an offer in compromise, and potentially turn a massive tax debt into a manageable and realistic tax liability.
An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS to settle for less than the full amount owed. As the IRS does not usually forgive debts, this is as close to an amnesty program as the IRS gets, and it’s been greatly expanded in recent years as part of their Fresh Start Program.
Qualifying for an OIC can save you thousands of dollars in owed taxes, penalties, fees, and interest. However, it’s not easy to meet eligibility requirements for an OIC. The IRS isn’t looking to eliminate debt outright – instead, they’re attempting to help taxpayers who cannot otherwise pay off their debts, by allowing them to pay off as much as they can, without meeting total financial ruin.
To figure out whether you’re eligible for an Offer in Compromise, the IRS will require a comprehensive suite of financial and personal information. This information will be used to calculate your Reasonable Collection Potential (RCP), or the amount of money the IRS can roughly expect you to pay.
OIC and the Fresh Start Program
Before the Fresh Start Program, this RCP was usually calculated by multiplying a taxpayer’s discretionary monthly income by 60. Offers in Compromise were also reserved for individuals with a maximum total tax debt of $25,000. Today, the IRS only calculates roughly 12 to 24 months of discretionary income to determine your RCP and has expanded eligibility to total debt of $50,000.
This means that as long as you qualify for a streamlined installment plan with the IRS, you may also have the potential to qualify for an offer in compromise! However, it’s important to note that an inability to pay with your current income is a key requirement for gaining the IRS’ approval for an offer in compromise.
There are other factors determining eligibility and what the IRS expects you to pay, and there may be application fees to consider if you aren’t eligible as a low-income taxpayer. Thankfully, if you do qualify as a low-income taxpayer, the IRS will refund these application and setup fees. Ask us to find out more about applying as a low-income taxpayer.
We offer a FREE IRS transcript investigation and analysis upfront – and a FREE pre-qualification consultation to see if you qualify for an Offer in Compromise. Most other firms do not do this, and the few that do, generally charge $1,500 for this service. We do this in advance for FREE because we want to make sure that we can help you upfront. We only take cases that we can help.
Who Qualifies for an Offer in Compromise?
The IRS requires taxpayers to make the first move in requesting an Offer in Compromise. They will outright deny requests if these don’t meet their calculated RCP, and under most circumstances, your tax debt does not stop accumulating interest while the IRS deliberates your offer.
The IRS has up to two years to consider an Offer in Compromise before it is automatically accepted – however, you can expect to wait anywhere from four weeks to six months for them to complete their consideration. Your debt will not cease to grow during this period! This is important to note, because an unserious offer in compromise can result in months wasted waiting on the IRS to respond, only to end up right where you started with additional penalties and interest gained on your debt.
Furthermore, the IRS requires that you send in your first proposed payment with your Offer in Compromise form application, and depending on the payment plan you propose, they may ask you to continue making monthly payments during the deliberation process – making it very important to get your submission package right the first time.
Aside from meeting the IRS’s RCP (and having an RCP that is below your total tax debt), there are a few other requirements and considerations for an Offer in Compromise.
These include being up to date with all your tax returns and being up to date on all estimated tax payments for the current year. If you haven’t filed all legally required returns or made any estimated payments this tax year, the IRS will automatically reject your offer, refund the application fee, and deduct the amount you sent them with the offer from your current tax debt.
What Are My Other Options?
An Offer in Compromise is not your only option, even if you have limited financial resources. Conventional long-term IRS payment plans divide a tax debt into 72 equal monthly payments, made over the course of 72 months, or six years. If you can afford to pay your debt off before it expires, or over the next six years, then the IRS will likely reject your offer in compromise – but may be open to a streamlined payment plan.
Unlike an IRS Offer in Compromise, setting up a streamlined payment plan is relatively simple and quite painless. There’s little to no extra paperwork involved, and most taxpayers qualify to set up a payment plan online, via the IRS’ official website. All you need to do is log into your tax account with your unique taxpayer ID and get started.
If you owe $25,000 or less, you can get started on a streamlined installment plan as soon as you sign up with the IRS. No Collection Information Statements are needed, and depending on your debt, the IRS might not even levy a federal tax lien against you. Furthermore, being in a payment plan with the IRS can often reduce your incoming penalties – meaning you can further minimize what you owe in the grand scheme of things.
If you owe between $25,001 and $50,000, you can still qualify for a streamlined installment agreement if you have the means to pay your debt in time, but you are required to setup either a Direct Debit agreement or a Payroll Deduction agreement. Both involve allowing the IRS to withdraw funds from your account directly, either through your bank or your employer.
Any debts above $50,000 qualify for neither a streamlined installment agreement, nor an offer in compromise. Instead, the IRS will require that you fill out an Installment Agreement Request, alongside a Collection Information Statement to verify your assets, income, and existing liabilities. A tax debt over $50,000 requires a more thorough verification process before the IRS can agree to an installment agreement plan, and the financial checks can be brutal.
Many taxpayers are better off making lump sum payments to reduce their debt below the $50,000 threshold, and then consider alternative options, such as a partial payment plan or an offer in compromise, or even a streamlined installment agreement if they have the financial means for it. Despite the IRS’ presumed lack of transparency, you do have a few options to choose from! But choosing the right one can be tricky.
If your debt is unpayable before its estimated Collection Statute Expiration Date (CSED), then you may be eligible for a partial payment plan. Under a partial payment installment agreement, the IRS allows you to pay as much as you can within your financial limits, with similar terms as an Offer in Compromise. A major difference between an Offer in Compromise and a partial payment installment agreement is that the latter may change as your financial situation improves.
If paying at all isn’t in the cards for you now, you can speak to a tax professional about declaring yourself currently non collectible before the IRS. This status will keep the IRS from levying any collection actions against you at all, for as long as you financially qualify as non-collectible. As your financial situation improves, the IRS may resume collection actions against you.
However, becoming currently non collectible does not protect you from a federal tax lien, neither does it protect you from additional penalties or an accumulated interest rate. And because the IRS cannot enforce any collection actions against you, the clock on your debt freezes. This means that if you’re currently non collectible for over a year, the IRS will not count that period towards the total age of your debt, and your CSED will be extended.
Installment agreements, partial payment agreements, becoming currently non collectible, or developing your own offer in compromise. There are many ways to approach a tax debt but figuring out which one is right for you can be difficult. Let us help you through our free consultation services.
Is an Offer in Compromise Right for You?
Getting a settlement approved is not an easy task, and your submission package must be completed accurately and without any gaps. Don’t bother trying to spoof your info or come up with ways to obfuscate your candidacy – the IRS has ample time to investigate your tax account, and will often reject offers in compromise. Furthermore, your initial payment will be taken one way or the other – there are no refunds for a tax debt. If you are not a good candidate for an IRS Offer in Compromise, we will discuss other available options that are best for you. Some of these options may include:
- An installment agreement
- A partial pay installment agreement
- Penalty abatement
- IRS Currently Not Collectible program
Beware of advertisers that claim tax debts can be settled through an Offer in Compromise program for “pennies on the dollar”, without them taking you through a thorough pre-qualification process first, and without checking out the firm’s references and client testimonials regarding success stories with the process.
Calculating a reasonable collection potential is not always straightforward. There are unique exemptions and other factors to consider, and while the IRS’ own pre-qualifier tool can help, it will never guarantee that the IRS will accept your offer.
The Offer in Compromise is not a silver bullet against IRS tax debt – it can, however, help taxpayers struggling under an enormous tax liability try to get their life back through a reasonable payment plan, negotiated with the IRS through a reputable tax firm. Contact us today to find out if you’re eligible for an Offer in Compromise.
Our Recently Approved Compromises