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A Closer Look at Offers in Compromise

You may have heard about Offers in Compromise on TV during the ads for ex-IRS agents who can help you "get out of debt quick."

But an Offer in Compromise is a lot more complex than just giving your personal information to an operator over the phone to fix tax problems. However, it is an option that can help you alleviate some of the stress of facing an insurmountable tax debt.

Let's take a closer look at how an Offer in Compromise, or OIC, works.

An OIC is when the IRS is willing to take less than what is owed on a tax debt, but only if there is no way that the debtor could pay back the full amount either through a lump sum or installment plan.

There are three types of OICs. A certified tax lawyer can help you determine your eligibility and establish which compromise is right for you. The three types are:

Doubt as to Collectability: This type is used when there is doubt that the full amount could be paid off within the amount of time that the IRS is requiring. Most often, this occurs when the amount of monthly income exceeds a person's monthly expenses. Also, the person does not own any property and is unable to pay the debt, even with monthly installments.

Doubt as to Liability: This type of OIC may be accepted if the taxpayer has new evidence that challenges the amount of debt owed, or the examiner made a mistake in interpreting the law when determining the amount owed. It may also be accepted if it is determined that the examiner did not correctly consider the taxpayer's evidence.

Effective Tax Administration: In this case, there is no doubt about the amount of tax owed, but a certain exceptional circumstance is present that would cause economic hardship to the taxpayer. For example, a taxpayer might be able to pay the debt by selling his or her home, but a terminal illness causes the taxpayer to need the profits from the home sale to cover living and medical expenses more than paying the debt.

Application fees and investigations are required for all of these options, and you can be certain that the IRS will look into your complete financial history and current situation. You will be required to submit proof of your monthly income and expenses, and your master tax file will need to be reviewed.

Providing this information can be a daunting task - one that, if done incorrectly, could cause an application denial.

The best thing to do for you, your family, and your business is to contact an experienced tax lawyer to help you. Not only will a lawyer sit down with you to help determine the best option, but he or she also can help you provide the right information to the IRS, heeding its strict guidelines.

Oklahoma's premier tax debt lawyer, Travis Watkins, can help you do this. He will provide you with a free copy of his book, The Ultimate Survival Guide for IRS Problems, when you call 800.721.7054. You will have the opportunity to sit down with him in a free consultation to figure out how to get your life back.

Call attorney Travis Watkins today, or fill out this online form to schedule an appointment.

Travis W. Watkins, P.C.

6402 N. Santa Fe, Suite B
Oklahoma City, Oklahoma 73116