How to Take Advantage of the IRS Back Tax Forgiveness Program or Offer in Compromise (OIC)
The IRS offers several programs to help taxpayers resolve unpaid back taxes and get back on track with their tax obligations. One of the most popular of these programs is the IRS back tax forgiveness program, also known as the Offer in Compromise (OIC) program. In this blog post, we will explain what the IRS back tax forgiveness program is, who is eligible for it, and how to apply for it.
An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that settles the taxpayer's tax liability for less than the full amount owed. The purpose of the OIC program is to give taxpayers who are unable to pay their taxes in full the opportunity to resolve their tax debt and become compliant with their tax obligations. The OIC program is considered a last resort after all other payment options have been exhausted or aren’t feasible.
To be eligible for an OIC, taxpayers must first be compliant with all of their filing and payment requirements. This means that they must have filed all required tax returns and made all required estimated tax payments for the current year. Additionally, they must be current with their federal tax deposits, if they are a business owner, and have made all required estimated tax payments.
The IRS will consider several factors when determining a taxpayer's eligibility for an OIC, including their ability to pay, their income, their expenses, and the value of their assets. Generally, taxpayers who can demonstrate that they do not have the financial means to pay their tax debt in full and that an OIC is their best option for resolving their tax debt will be considered for the program.
To apply for an OIC, taxpayers must complete and submit Form 656, Offer in Compromise, along with a non-refundable application fee and an initial payment, called a "proposal." The application fee is $205, or it may be waived for low-income taxpayers. The proposal is a percentage of the total amount owed and is based on how much the taxpayer can pay at the time of the offer, and how they intend to pay the remainder of the offer.
Once the OIC application is received by the IRS, the agency will evaluate the application and request any additional information that is needed to make a determination. The IRS may also ask for a face-to-face interview with the taxpayer, and will also consider an alternative payment arrangement, if the taxpayer is not qualified for the OIC program.
It is important to note that submitting an OIC does not prevent the IRS from taking enforcement action like a levy or a lien against the taxpayer during the evaluation process. However, If the OIC is accepted by the IRS, enforcement action will stop. The acceptance of an OIC is also considered to be a privilege, not a right.
It is important to seek the assistance of a tax professional or a tax attorney when submitting an OIC, to navigate the application process and increase the chances of the OIC being accepted.
In conclusion, the IRS back tax forgiveness program, also known as the Offer in Compromise program, is a valuable tool for taxpayers who are unable to pay their taxes in full and are looking for a way to resolve their tax debt. This program can provide relief for taxpayers who meet the eligibility requirements and can demonstrate that they do not have the financial means to pay their tax debt in full. If you think you may qualify for the OIC program, it's worth considering and consulting a tax professional or attorney to help navigate the application process.