Let’s say the IRS sends you a bill for $100,000 in back taxes, and you don’t have half that money in your savings and retirement accounts combined. Is bankruptcy the only solution? Not at all: you and your tax lawyer can work out an Offer in Compromise (OIC), which is basically a way of bargaining with the IRS to pay them less money than they claim you owe, over a longer period of time. Hammering out an OIC can be a tricky business, however, which is why you need an experienced attorney from the law firm of HYPERLINK "http://taxhelpok.com/"Travis Watkins, PC.
There Are Three Kinds of Offers in Compromise
The IRS won’t allow just anyone to make an OIC; the taxpayer has to fall into one of three specific categories, as follows:
- Doubt as to Collectability. This is when the IRS, after carefully examining your finances, concludes that there’s no way you can pay your tax bill in full, either now or in the foreseeable future.
- Doubt as to Liability. This when the IRS can’t prove, beyond the shadow of a doubt, that you owe a certain amount of money. (However, the IRS knows that you owe some money, so not paying anything is not an option!)
- Effective Tax Administration. This is when the IRS has determined that you do have the funds to pay your tax bill in full, but doing so would result in extreme economic hardship or an “unfair and inequitable” outcome.
One good thing about an OIC is that the negotiated amount needn’t be coughed up immediately; the IRS will allow you to pay your tax bill in regular installments, though there may be some added fees involved.
An OIC Is Often the Best Recourse for Financially Strapped Taxpayers
An OIC is by far the most popular “alternative solution” to full payment of your taxes, but to use this tool effectively you need the advice and guidance of an experienced tax lawyer. The attorneys at Travis W. Watkins, PC have decades of experience hammering out OIC agreements with the IRS on behalf of their clients; call now at (800) 721-7054 for a free consultation!