Offer in Compromise

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Yes, you can do it by yourself. I am filling out the paperwork now. If the OIC is denied you can keep re-submitting but never below the initial offer that was denied. There is a lot of paperwork but I think it is worth trying to save the additional cost of a professional (up to $3,000).

As an Enrolled Agent licensed by the IRS to represent taxpayers and as a Practitioner who specializes in tax issues like Offers in Compromise I would have to say that most of the advice given so far is somewhat inaccurate.

The IRS admits to accepting about 3% of the Offers submitted, the lion's share of those rejected are self-prepared Offers. My acceptance ration is close to 80%. You can do it yourself but the IRES will not give you any more leeway than if the Offer was prepared professionally. The Financial Statement you must submit (Form 433A) lists all your assets, so when the Offer is rejected, you have just told the IRS where everything you have is - and Collections will simply start filing levies.

What are the main errors in self-submitted Offers?

1. Assuming the IRS will allow all your actual expenses in determining your ability to pay. This simply is not the case. Many of the expenses in the Income Table on Page 6 of Form 433A have limits. IRS will allow your actual, provable expenses up to the limitation. Other expenses the IRS simply will not allow at all.

2. Not being in filing compliance when the Offer is submitted.

3. Not having made 2 consecutive Estimated Tax payments before submitting the Offer. The IRS is a stickler on ongoing compliance.

4. Not including ALL tax liabilities hanging out there.

5. Insufficient documentation of expenses claimed.

A qualified professional will explore all these areas with you.

Yes, I have done an offer in compromise. Use IRS form 656 which comes with the explanation of what to do with the form. My story is that according to the IRS, I owed them about $67,000 in back taxes and penalties.

This had been accruing for years and when I got married, I wanted to get something worked out with the IRS. So I filled out the form 656 and set up an appt with an IRS agent. He was very kind and helpful with filling out the form propertly.

Basically, what you need to do is show the IRS that you will not be in a position to pay the debt that they say you owe them. In my case, there was just no way with my income and my wife's small income that we could ever pay off my IRS debt of $67,000.

I gave them my situation in writing, our assets ($3,000), cash on hand of about $ 2,500 and our income. My income at that time was about $750 a month, my wife's income was $600 a month, and our rent was $100 a month. We had to pay car insurance for both cars and list all of our other expenses.

Our income was low at the time because my wife and I were serving full time in a non-profit ministry. But that was not the deciding factor for the IRS. Their decision was that based on our income we would not be able to pay the total amount owed.

I made an offer to them of $ 2,500 which was almost all of our immediate cash. They countered back at $ 3,500 and said that was there firm and final offer to complete an offer in compromise.

So we came up with the money and paid basically about 5 cents on the dollar to be rid of the huge debt. The other part of the agreement that you make with the IRS in this particular arrangement is that you will file your income tax report on time for the following 5 years and pay your taxes on time. If you fail in either of these stipulations, they can reinstate the original debt plus what you currently owe.

So if you do the offer in compromise and get it negotiated, report on time after that and make sure you pay your taxes. We did and we are free!

I hope this helps you. We filed back in 1999, but I don't think anything has changed since then with their procedure.

marketop

you also must not have any equity in a home or they will not accept an oic - thats where we are right now. they want the equity and are going to force a foreclosure if we cannot get the refinance to pay them off period.

I owe about $6,000 to the IRS for the last two years including penalties and interest. My hope is to file an OIC and offer somewhere around $2,000. My only asset is a car worth about $1,000. My income is n/a right now as I am unemployed, but I should have a job by the time all the paperwork is filled out. My expenses will be very very close to my income every month. Anyone think I have a chance at this?

I know isn't it crazy the amount of interest/penalties they can put on us so its like it never goes away - needs to be addressed like the dumb credit card tactics were. but I do know that on the OIC it must be an amount that is at least equal to or more than what your assets are - since their liens mean ALL property not just a home. And if you have a home, and any equity in it - they will want that period so as in our case they want ya to get a refinance or equity loan to pay them off or they will force foreclosure on the home to get that equity for themselves and they don't care about the first original mortgage holder - who of course will then still expect to be paid even though you no longer have that house, which then forces ya into bankruptcy and homlessness and probably no longer a job (so they won't get any more taxes since no job) because you will be living in your old 15yr old car parked in some field which makes it near impossible to live normally to go to work each day (shower, phone, food, etc). It stinks and with crippled credit that we are trying to repair (near 7 years so most should be dropping off) we can't get the refinance for at least 6 months. Right now I would be happy with that payment plan in our case - that would mean no foreclosure but alas that too is very hard because they again want the equity in the house we live in and don't seem to want to wait with a pmt plan till we can re apply for the refinance. If you have nearly no assets, then go for the OIC as long as you have the cash to pay it when you file it.

I did an Offer In Compromise to the IRS thru a tax preparer company. It cost me 1200 dollars so far. I could have did it myself just by doing the right forms. My question is if the IRS don't accept your offer dothey give you a counter offer and if so would they do the payment plan with you. And if you dont have the full amount do they take how much by garnishing my pay. just wondering if I should just call and ask for a payment plan. Thanks

I have a company helping me I have file the OIC and waiting for a reply. Will they give me a counter offer if they don't agree with my offer and will they give me a payment plan. I owe about $13,000. What good would it do to appeal if they don't accept my offer. It would cost me another $750 thru this company I am using. If I do get accepted and get to make payments and I get layed off woul dthat cancel the whole deal I made to them (IRS) Thank you ever so much for your wisdom.

I have a company helping me. I filed an OIC and I'm waiting for a reply Will they give me a counter offer if they don't agree with my offer. And will they give me a payment plan. What good would it do to appeal? It would cost me $750 thru the company I am using. If I do get accepted and get a payment plan what would happen if I got layed off.Thanks