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If you owe significant back taxes and are unable to pay the full balance, you may have heard about the IRS Offer in Compromise program. An Offer in Compromise, commonly referred to as an “OIC,” is a tax resolution option that may allow certain taxpayers to settle their IRS tax debt for less than the total amount owed if they qualify under IRS guidelines.
At Z Tax & Accounting, we help individuals and businesses in Irving, Dallas, Fort Worth, Plano, Arlington, throughout the DFW Metroplex, and nationwide evaluate whether an Offer in Compromise may be appropriate based on their financial circumstances.
Not every taxpayer qualifies for an Offer in Compromise, and the IRS carefully reviews each application based upon income, assets, expenses, and overall ability to pay.
An Offer in Compromise is a formal request asking the IRS to accept less than the full amount of tax owed in order to resolve the tax liability.
The IRS generally evaluates:
Current income
Monthly living expenses
Equity in assets
Bank accounts
Investments
Business interests
Future ability to pay
Filing compliance
The IRS will typically approve an Offer in Compromise only when it believes the taxpayer cannot reasonably pay the full balance within the allowable collection period.
The IRS may consider Offers in Compromise based on:
Doubt as to Collectibility
Doubt as to Liability
Effective Tax Administration in limited circumstances
Most OIC applications involve financial hardship and inability to fully pay the tax liability.
Many taxpayers accumulate IRS debt due to:
Self-employment income
Business losses
Payroll tax issues
Unfiled tax returns
Divorce or medical hardship
Cryptocurrency or investment gains
International tax issues
Economic hardship
Unexpected IRS adjustments
Every taxpayer’s situation is different, and an Offer in Compromise is only one of several possible IRS resolution options.
Before the IRS will generally consider an Offer in Compromise:
Required tax returns usually must be filed
Current tax compliance must generally be maintained
Estimated tax payments may need to be current
Payroll tax deposits for businesses may need to be current
The IRS also reviews:
Financial statements
Income and expenses
Assets and liabilities
Supporting documentation
Many advertisements incorrectly suggest taxpayers can easily settle IRS debt for “pennies on the dollar.” In reality, the IRS carefully evaluates each case, and not all taxpayers qualify.
In some situations, other IRS resolution options may be more appropriate, including:
Installment agreements
Partial payment installment agreements
Currently Not Collectible status
Penalty relief requests
Filing missing returns
At Z Tax & Accounting, we help taxpayers review their financial circumstances and evaluate potential resolution strategies.
Business owners facing payroll tax liabilities or business tax debt may also consider:
Payroll tax resolution
Business installment agreements
Collection alternatives
Compliance restoration
Payroll tax matters can involve additional IRS considerations and should generally be addressed carefully.
Taxpayers with international tax matters may also face:
Foreign reporting penalties
Offshore compliance issues
FBAR matters
Form 8938 issues
International information return penalties
Our office also assists taxpayers with international tax compliance and offshore reporting matters.
Ahsan Bashir is admitted to practice before the IRS and assists taxpayers with:
Offer in Compromise evaluations
IRS correspondence
Collection matters
Financial statement preparation
IRS notices
Tax resolution strategies
Compliance issues
Our office works with taxpayers to review available options and determine the most appropriate path toward resolution based on their individual circumstances.
Our office proudly assists taxpayers throughout:
We also provide secure virtual services for taxpayers nationwide.
If you owe substantial back taxes and would like to evaluate whether an Offer in Compromise or another IRS resolution option may be appropriate, our office can help review your situation and discuss available options.
Contact Z Tax & Accounting today to schedule a consultation regarding your IRS tax matter.