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Offer In Compromise (OIC) Lawyers
An Offer in Compromise (OIC) is a tax relief program designed to allow individuals or businesses to negotiate a settlement amount for less than the total amount of tax that they owe. This will allow the taxpayer to be relieved of their tax liabilities while the government collects a portion of the money that it is owed.
Generally, an OIC will only be accepted if the taxing authority believes the taxpayer cannot make the payment in full. The offer must also equal or exceed the amount that the government can collect from you through enforcement measures such as a tax levy or asset seizure. Although this is an effective form of tax relief, a poorly prepared offer will be rejected and can have negative consequences, so it is essential that you hire a qualified local tax lawyer to assist you.
Unlike many of the companies that promote this program, we will conduct a thorough review of your situation to ensure that an Offer in Compromise is appropriate for you, and use our knowledge and experience to achieve the best possible outcome.
How to Qualify for an Offer in Compromise
A taxpayer can qualify for an Offer in Compromise in two different ways.
Doubt as to Collectability
Effective Tax Administration
Our experienced tax attorney and enrolled agent at Poole Brooke Plumlee PC can help you determine, identify, plan, and execute an OIC based on your individual situation and we can prepare an offer that stands the best chance of being accepted.
Offers in Compromise Based on Doubt as to Collectability
Based on your assets, liabilities, household income, and monthly expenses, the IRS identifies your “reasonable collection potential.” The amount you offer as an Offer in Compromise must equal or exceed this calculated amount.
We review your financial information and ensure that all of your expenses and liabilities are included in the documents for review. Based on the financial information you provide, we will estimate the OIC amount. If the IRS accepts your offer and you comply with their terms of acceptance, your tax liability will be settled and the remaining tax amount will be written off.
You can make a lump sum offer or a periodic payment offer. The lump sum offer requires that you fully pay your agreed offer amount in 5 months or less. The periodic payment offer requires that you fully pay your agreed offer amount in 6-24 months. Usually, the periodic payment offer results in a larger payment amount.
Offers in Compromise Based on Effective Tax Administration
An OIC for Effective Tax Administration (ETA) can be filed if you agree to the amount that is owed to the IRS and you have enough in assets and income to pay the full amount; but due to exceptional circumstances, requiring full payment would cause an economic hardship or collection of the full liability would undermine public confidence that the tax laws are being administered in a fair and equitable manner. One of the most common reasons for an ETA Offer in Compromise is hardship due to health issues. These types of offers are typically made in cases where collection will create a hardship for the taxpayer (e.g. keeping you from meeting your basic living expenses).
Conditions for IRS Offers in Compromise
If the IRS accepts your Offer in Compromise, you are required to:
- Stay current on filing and paying taxes for five years from the date of acceptance of the OIC
- Remain current in filing and paying estimates or withholding taxes for the present tax year
When these conditions are not met, you will be considered in default, and the IRS will resume collecting on the full amount of the taxes due.
Can Anyone Qualify for an Offer in Compromise?
No. In truth, the IRS accepts fewer than half of all the OICs it receives every year. This is one of the many reasons why you want to consider this strategy with help from a tax attorney in Virginia.
At Poole Brooke Plumlee PC, we will review your financial situation and give you our honest opinion on whether or not you are a good candidate for an Offer in Compromise. If you are, we will prepare an offer that stands a good chance of being accepted. If not, we will help you find the next best option for you to resolve your taxes with the IRS.
OICS and State Taxes
If you owe state tax that you want to compromise, you will have to make a separate offer to the state taxing authorities. If the IRS accepts your offer, the odds of the state accepting an Offer in Compromise increase, but it is not guaranteed. If you have questions about dealing with state taxes, a local tax lawyer at our firm can answer them.
What if Your OIC is Rejected?
If your OIC is rejected and you don’t agree with the IRS’s decision, you have the right to appeal. In some cases, the IRS rejects an application due to a lack of information, so you should definitely consider appealing if you have additional details for the government to consider. You have 30 days after the denial to appeal, so contact our firm if you’ve recently received a rejection that you wish to appeal.
Speak With An OIC Lawyer & IRS Enrolled Agent Today
If you think you may qualify for an IRS offer in compromise, speak with a qualified tax attorney at Poole Brooke Plumlee PC to discuss your options. Once our team has reviewed your tax situation and confirmed that you are eligible for an Offer in Compromise, we will handle all communication and negotiations with the IRS. You won't have to worry about how much you should offer or whether your Offer in Compromise will be evaluated. We will work diligently to protect your rights and achieve the best possible outcome. To schedule a consultation, contact us today.
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