Understanding Tax Settlement: The Offer In Compromise
Tax settlement is also known as an Offer in Compromise (OIC). It is a tax relief resolution that is offered by the Internal Revenue Service (IRS) and State revenue services to taxpayers who are unable to pay their full tax debt. It is a formal agreement between the taxpayer and the IRS or state that allows the taxpayer to settle their tax liability for less than the total amount owed. Tax settlement can be a valuable option for individuals and businesses facing financial hardships, providing them with an opportunity to resolve their tax debt and achieve a fresh start.
Benefits of Tax Settlement:
The primary advantage of tax settlement is that it provides taxpayers who are in debt the opportunity to resolve their tax debt and achieve a clean slate with the IRS and state. During the tax settlement process, the IRS usually suspends aggressive collection actions, such as wage garnishments, bank levies, or property seizures. This provides much-needed relief to taxpayers, allowing them to focus on their financial recovery.
Are You Eligible For Tax Settlement?
To be eligible for an Offer in Compromise, taxpayers need to meet certain requirements and provide substantial documentation to support their application:
- Tax Liability: You must have a legitimate tax debt. This includes all assessed tax, penalties, and interest. You’ll need to have filed all required tax returns before applying.
- Doubt as to Liability: You can prove that the assessed tax liability is incorrect. For example, you can provide evidence that the IRS made an error in calculating your tax debt.
- Doubt as to Collectibility: You can demonstrate that you cannot pay the full amount of tax owed now or in the foreseeable future. This often requires detailed financial documentation to show your income, expenses, assets, and liabilities.
- Effective Tax Administration: Even if you can pay the full amount, you can prove that doing so would create an undue financial hardship or be unfair and inequitable. This option is less common.
- Current with All Filing and Payment Requirements: You must be up to date with all your tax filing and payment obligations. This means you have filed all required tax returns and made all necessary estimated tax payments for the current year.
- No Open Bankruptcy: If you’re in an open bankruptcy proceeding, you generally cannot apply for an OIC.
- Compliance with Terms of Prior Agreements: If you’re on a current installment agreement or other repayment plan, you must continue to make payments and comply with the terms of those agreements.
Looking For Tax Relief?
At CuraDebt Tax, we have a team of tax professionals who are able to find the best IRS resolution available to you. Contact us to better understand your tax problems and to choose the best IRS resolution option. CuraDebt has been helping individuals and small businesses for over 22 years nationwide. As of May 2023 CuraDebt received a score of 5 out of 5 on CustomerLobby for a total of 1179 customer views. CuraDebt is an Accredited Member of the American Fair Credit Council. Contact us for a free consultation. 1-877-999-0486. Take advantage of exploring another option for free. Not only do we handle tax relief, we also offer debt relief.
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