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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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How do I file an offer to compromise with the IRS

Customer Question

How do I file an offer to compromise with the IRS
Submitted: 2 months ago.
Category: Tax
Expert:  Lev replied 2 months ago.

Sorry for your situation...

In such case you might want to consider an offer in compromise (OIC) ?

An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer's tax liabilities for less than the full amount owed.

Taxpayers who can fully pay the liabilities through an installment agreement or other means, won't qualify for an OIC in most cases.

Expert:  Lev replied 2 months ago.

It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship. The IRS will consider your unique set of facts and circumstances: Ability to pay; Income; Expenses; and Asset equity.

The IRS generally approves an offer in compromise when the amount offered represents the most they can expect to collect within a reasonable period of time.

You'll find step-by-step instructions and all the forms for submitting an offer in the Offer in Compromise Booklet, Form 656-B .

https://www.irs.gov/pub/irs-pdf/f656b.pdf

Your completed offer package will include:

  • Form 433-A (OIC) (individuals) or 433-B (OIC) (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;
  • $186 application fee (non-refundable); and
  • Initial payment (non-refundable) for each Form 656.

You might want to have a local CPA helping you will all that paperwork - but that is not required and you may do everything on your own.

Let me know if any clarification needed.