Offer in Compromise
Many taxpayers find themselves in a never-ending cycle which keeps them consistently in debt to the IRS. Due to recurring late fees and other penalties, it isn’t uncommon for taxpayers to rack up additional debt faster than they can pay it off! These old tax liabilities can prevent you from owning a house or vehicle, or even opening up a bank account.
Often banks will not offer loans if your credit report currently has a federal tax lien due to tax debt. The IRS offer in compromise (OIC) program allows you to settle your tax debts for less than the owed amount. Preparing and successfully negotiating an OIC is a complicated process that can take anywhere from 3 to 12 months.
Rather than taking on this complex burden yourself, let the tax experts at Franskoviak Tax Solutions present an Offer In Compromise (OIC) on your behalf. Our years of practice and familiarity with the tax payment process allow us to expedite cases and achieve the best results for our clients.
Our firm will prepare the Offer In Compromise (OIC) documents and handle all related IRS negotiations on your behalf. With our team of experienced CPA’s, enrolled agents, and tax professionals, you never even have to meet with the IRS! Our success rate for OIC acceptances is superb and we have saved hundreds of clients thousands of dollars and returned peace and stability back into their lives.
Feel free to browse our testimonials for examples from past satisfied clients, and contact us when you’re ready to schedule your free consultation.
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An Offer In Compromise (OIC) is a program offered by the Internal Revenue Service (IRS) to help taxpayers with tax debt who are unable to pay their full tax liability. It allows taxpayers to settle their tax debt for less than the total amount owed.
The OIC program provides eligible taxpayers with a fresh start towards financial stability. However, not everyone qualifies for an Offer In Compromise. The IRS carefully evaluates each taxpayer’s individual situation to determine if they are eligible for the program.
To be considered for an OIC, taxpayers must meet certain eligibility requirements set by the IRS. These include:
- Tax Liability: Taxpayers must have filed all required tax returns and made any necessary estimated tax payments for the current year. They must also be current with their tax payments and not have any open bankruptcy proceedings.
- Ability to Pay: The IRS will consider a taxpayer’s income, expenses, assets, and potential future income when determining their ability to pay their tax debt. If it is determined that the taxpayer has enough disposable income or assets to pay their full tax liability, they will not qualify for an OIC.
- Doubt as to Liability: Taxpayers can also apply for an OIC if they believe there is a doubt as to the accuracy of their tax debt. This means they have evidence to support that they do not owe the full amount of taxes claimed by the IRS.
Once a taxpayer has met these eligibility requirements, they can begin the process of submitting an Offer In Compromise to the IRS. This involves completing and submitting Form 656, along with supporting documents and a non-refundable application fee.
Benefits of an Offer In Compromise
The most significant benefit of an Offer In Compromise is that it allows taxpayers to settle their tax debt for less than the full amount owed. This can provide much-needed relief for individuals and businesses struggling with financial difficulties.
Other benefits of an OIC include:
- Stopping Collection Action: When a taxpayer submits an OIC, the IRS will immediately stop all collection efforts, including wage garnishments, bank levies, and tax liens.
- Flexible Payment Options: The IRS offers various payment options for taxpayers who are approved for an OIC. These include a lump-sum payment or monthly installments.
- Finality: Once the IRS accepts an Offer In Compromise and the taxpayer pays the agreed-upon amount, their tax debt is considered fully satisfied, and they will no longer owe any additional taxes for that specific liability.
While an Offer In Compromise can provide significant relief for taxpayers with tax debt, there are some considerations to keep in mind before applying. These include:
- Additional Fees: In addition to the non-refundable application fee, taxpayers may incur additional costs related to their OIC, such as hiring a tax professional or obtaining necessary documentation.
- Credit Score Impact: Submitting an Offer In Compromise can potentially have a negative impact on a taxpayer’s credit score. It is essential to consider this before applying for the program.
- Future Tax Compliance: As part of the OIC process, taxpayers must remain in compliance with their future tax payments and filing requirements. Failure to do so can result in defaulting on their OIC agreement and owing the full amount of taxes originally owed.
In a Nutshell
An Offer In Compromise is a valuable program offered by the IRS to help taxpayers with tax debt find relief and reach a resolution with their outstanding taxes. While it may not be the right option for everyone, meeting the eligibility requirements and carefully considering all factors can help individuals and businesses determine if an OIC is the best solution for their situation.
If you are struggling with tax debt, it is worth exploring the possibility of an Offer In Compromise and seeking professional guidance to navigate this complex process.
Remember, there is always a path towards financial stability, and the OIC program may be the answer you have been looking for. So don’t hesitate to reach out for help and take advantage of this helpful program offered by the IRS. Your financial future may depend on it!
Contact us for a free consultation at 1-855-TAX-FIXX (829-3499) or email us at email@example.com, website https://franskoviakcpa.com — we’re here to help you with tax resolution services, understanding your rights, assessing your unique situation, and where required, negotiating with the IRS on your behalf.
Frequently Asked Questions About Offer In Compromise (OIC) (FAQ)
What is an Administrative Appeal?
An administrative appeal is the process in which a senior official or attorney, not necessarily a judge, within the agency will review the initial decisions made by FOIA regarding your case and determine whether to uphold or reverse that decision.
Does the IRS usually accept an offer in compromise?
The IRS generally will approve an offer in compromise when the amount offered represents a taxpayer’s most they can afford to pay within a reasonable period of time.
What happens if the IRS rejects an offer in compromise?
The IRS will not record your withdrawal of an Offer in Compromise, but a rejected Offer In Compromise is considered strike against your record. Especially if the reason it was rejected is not corrected. There is incentive for them to accept it though — getting some money back is better than getting no money back.
Some of Our Success Stories
Justin Havner ~ Metro Detroit, Michigan ~ Hardwood Floor Installer
Offer in Compromise
Justin, av hardwood floor installer, had fallen into some hard times due to the economic downfall in the construction industry. The circumstances put Justin and his wife a hefty bill of $41,194.26 due to the IRS for back taxes, and they had no means of being able to pay it off.
Justin came to Franskoviak Tax Solutions P.C. to find out if he could qualify for any relief with his IRS tax bill. With the IRS “Fresh Start” program we were able to settle his tax debt for $500.00, a settlement rate of only 1.2%!
Justin was now able to continue to provide for his family without the worry of the IRS showing up and taking everything. He appreciated everything we had done for him and had these kind words to share.
“They [Franskoviak & Company, P.C.] been great the whole time. They helped me out, that’s for sure.” “[Franskoviak & Company, P.C.] was extremely helpful in getting this resolved. Got nothing but good things to say.”
Owed: $41,194.26 Settled: $500.00 ~ 5 Months
Offer in Compromise & Currently Non-Collectible Status
Ashley and Charles ~ Shelbyville ~ Full Time Student
Offer in Compromise
Ashley and Charles had a lucky streak at a casino. However, when it came time to file for taxes that year, their lucky streak ended up costing them with a tax bill they could not afford with the State of Michigan. Ashley is a full-time student so that left them with little funds to spare. We negotiated with the State of Michigan and we were able to settle their tax debt for $2,000, a savings of $14,944.
Ashley felt relief when she heard the encouraging news; in fact she had some words of praise for Franskoviak Tax Solutions, P.C. “You guys [Franskoviak Tax Solutions, P.C.] helped us out a lot! Everything went so well, we were in a tough spot. It took a load off of my mind.”
Owed: 16,944.00 Settled: 2,000.00 ~ 1 Year
Phillip C. ~ Police Sergeant Saint Clair Shores, Michigan
Offer in Compromise
Phillip C., a 20 year member of the Detroit Police force, and a single parent, had gotten into some tax trouble. Unfortunately, the IRS Revenue Officer assigned to his case was threatening to garnish wages and seize his bank accounts if he didn’t come up with a large sum of money.
Phillip was very concerned, because he supports and raises two children, leaving him with not a lot of monthly cash flow to make the large payments the IRS was demanding. With his financial situation he would qualify for an Offer in Compromise as part of the IRS’s Fresh Start Program. After renegotiating with the IRS we were able to get his debt settled down to $13,560.72.
“Calling you guys was the best decision I ever made. I will recommend you guys to anyone. Your service was great and you thoroughly explained all the pro’s and con’s. I learned a lot very quickly about the IRS in a short period of time, the process was fully explained which made me very comfortable about my decision. Everything was excellent, emails answered promptly, atmosphere was nice, staff was welcoming and coffee was tasty too!”
Owed: $135,525.76 Settled: $13,560.72 ~ 15 Months
Jimmie B. ~ Eastpointe, MI ~ Construction Worker
Partial Payment Installment Agreement
Jimmie B. owed $145,477 in back taxes to the IRS for failing to file and pay his 2002 through 2011 income taxes. Jimmie feared of IRS collection actions including asset seizure and levy. Our team of tax specialists immediately went to work and negotiated a Partial Payment Installment Agreement with the IRS, of $333 per month for the statute of limitations, or approximately 120 months.
The amount paid back to the IRS after that time will come to a total of $39,960. The Franskoviak team of tax specialists saved Jimmie $105,517; equaling 72% of the original amount owed.
Owed: $145,477 Settled: $39,960 ~13 Months
Steve C. ~ Real Estate ~ Professional Bloomfield Hills, MI
Offer in Compromise ~ 9 Months
Steve is a Real Estate professional, and unfortunately owed back taxes for several years because he didn’t pay quarterly estimates. Also because of the Real Estate downturn, his income had decreased over the last several years. Steve owed the IRS $159,847 for the last seven years, and was unable to make the monthly payments the IRS demanded. We filed the Offer in Compromise, and we were able to settle his tax debt of $159,847 for only $12,498, a settlement rate of only 8%.
“The people that worked on my case did an excellent job of negotiating, knowing the rules, and updating me along the arduous process. They helped keep the stress down that was pretty intense. Thank you to the Franskoviak team!”
Owed: $159,847 Settled: $12,498
Robert Z. ~ Company President ~ Michigan
Offer in Compromise
Small business owner that ran into some financial trouble and had to file bankruptcy, he had a large capital gains taxes, penalties and interest owing from the sale of real estate and a subsequent IRS exam, we settled the debt for a $573,000 savings.