Settling Tax Debt With Offers In Compromise
Taxpayers may receive offers in compromise, or OICs, as agreements to settle tax debt. These agreements compromise on principal, penalty and interest due. The IRS typically resorts to these offers when it is determined that a taxpayer will not be able to pay for outstanding taxes in full over the life of the statute of limitations.
Most taxpayers end up agreeing to installment payments, choosing to pay the amount owed over a given amount of time. The IRS will determine how much a taxpayer can afford to pay. These payments may be too high for some taxpayers. If you disagree with the IRS valuation of your ability to pay, then you should contact our law firm. We can help put together additional documentation to support an offer that is best suited for you.
Enforcement Of Offers In Compromise
If your offer in compromise is accepted then you will need to tread lightly during your five year payoff period. The IRS is choosing to take these agreements seriously. Our firm has seen an uptick in enforcement of offers in compromise, for both civil and criminal tax penalties.
You are allowed one extension during the five-year period. Ultimately, if you do not pay your offer in compromise on time, and if you do not pay your installments on time, then your offer will default. However, even if you make all your payments, you could still default. Making any tax mistakes, such as failing to file a tax return, can cause your compromise to default.
If the offer defaults, then the IRS may levy or file a lawsuit against you to collect the full balance of the agreement. Or they have the right to file suit for your original full tax debt if you have not made any payments.
Call Us Before Missing Your Payments
However, before defaulting on an agreement, contact our tax lawyers. We may be able to work with the IRS to help you reach monthly payments that better match your financial situation.
If you miss a payment or make a mistake on your taxes during your agreement period, the IRS will send you a letter, notifying you of the issue. If you receive a letter then take action immediately, because the IRS could quickly pursue your owed tax money. Communicating directly with the IRS personnel can be intimidating. We can handle all communications with the IRS. If civil or criminal litigation is necessary, then our tax law attorneys are prepared to advocate on your behalf.