IRS Offer and Compromise

When tax season comes upon us, it is always considered a time of the year when people sometimes find themselves owing taxes. In some situations, some people aren't always able to pay those taxes upon the time in which it's being requested. As this happens, the IRS gets involved, as well as cases of people who have gone years without paying the taxes owed on what they have filed in previous years. Taxpayers in this situation have been able to file for what is known as an IRS offer and compromise, which has provided them with a reasonable solution in affordable payments.

Though many people do the best that they can to be diligent with the filing of their taxes, and paying what taxes are owed, some have found themselves owing more than they can financially handle. Because these amounts can become more than what a taxpayer and their family can handle, they miss out on their opportunity to pay, which flags the IRS. What makes matters even worse in these particular situations is when this carries on for years without any resolution. When matters like this occurs, naturally, people are scared and feel hopeless, as they are hopeless, they find that they become overwhelmed with grief. In stressful times such as this, especially those financially, this is natural, what's important though, is that people must remember there are always solutions in situations such as this. In this particular case, the solution with dealing with these unpaid taxes that are building is an IRS offer and compromise, otherwise known as an IRS OIC.

An IRS offer and compromise is a legal form that is Form 656-PPV, that allows a person to file for the consideration for the opportunity to be granted a settlement offer and placed on a payment plan system. These payment plans are put together by the IRS themselves, where they take into consideration the amount of money that the applicant is currently making, and assess what payments are conducive for both parties. There are three ways in which an IRS offer and compromise can be done; doubt as to collectiblility, doubt as to liability, and effective tax administration.

Doubt as to Collectibility

This policy is brought into the taxpayers situation when it appears that the applicant is not able to afford the full amount that is being asked for. The doubt in this particular situation must come directly from the IRS. Should they feel that the taxpayer will not be able to pay the amount that is being asked of them, then they will offer a settlement. This judgement is based upon reviewing the taxpayers financial income. Should their income prove to show that the taxpayer would not be able to afford to asked for amount, and they have no real property, or not enough to live them at the financial standards of living, then they will grant this judgement.

Doubt as to Liability

This policy is granted amongst those taxpayers who can provide prove that though the amount is correct, their was an overlook in the presented evidence on the IRSs' part, new evidence arises in the favor of the taxpayer, or the IRS agent misunderstood a particular law when assessing the case. This is more typical in the business world than anything. In most cases, this arises with those who are within the corporate world who may have resigned from their position prior to the filing of such taxes, or before the evidence was presented. These particular situations would look at the date of which the person has resigned from said position, which would clear them from this case.

Effective Tax Administration

In using this particular policy, the IRS agent has already figured that the amount to be paid by the taxpayer is, without a doubt, correct. However, the time in which this policy is initiated in the case of a taxpayer is when there is a particular circumstance within the life of the taxpayer that they are financially bound to, and it's detrimental that they remain financially dedicated to the circumstance. The IRS agent will take this event and situation into consideration as they begin the process of granting the offer, for they realize that the actual amount that is being asked for will cut into the financial standing of the taxpayer, keeping them from being able to commit financially to their important situation. For instance, this circumstance could be that the taxpayer is providing constant care to a terminally ill family member, meaning that they must constantly pay out money to sustain such care.

Upon receiving these particular different filing policies, the taxpayer will have three different options in which they can go about paying for the IRS offer and compromise; lump sum cash offer, short term periodic payment offer, and deferred periodic payment offer. In order to enroll in this program, the applicant must pay a fee of $150.

Lump Sum Cash Offer

There are installments set up, where the taxpayer must pay the $150 along with five payments within the next following five months. Following this, they will have up to 48 months of being able to pay off this amount, which they also have the option of paying it in fewer installment plans.

Short Term Periodic Payment Offer

The taxpayer must still pay the application fee within the first payment, and from there, the taxpayer will have the opportunity to pay off their amount within 60 months, or less.

Deferred Periodic Payment Offer

Upon paying the application fee within the first payment, the taxpayer will have the opportunity to have all of the amounts collected absorbed into one total amount in which they are paying for. The taxpayer will have the total time in which they were originally expected to pay for this amount, which can be several years. However, the only stipulation with this particular type of payment option is that the IRS agent reserves the right to suggest that the taxpayer increases the amount of their payments if they notice an increase in their financial income over the course of this payment option.

Using an IRS offer and compromise form has been something that many different individuals have rightfully been able to use for their benefit. As these forms are filed, many taxpayers have been able to find the financial help that they need, even in situations where they thought there was no hope to be found.