The acronym OIC stands for a tax agreement called an "offer in compromise". This is a settlement with the IRS and a taxpayer when there is substantial proof that one cannot pay the full amount of taxes owed. On the contrary, if it can be proved that one does have the capability of paying the full amount of taxes owed, this type of settlement does not become an option.
Someone considering this type of settlement should remember that the IRS will usually reject an offer from a taxpayer if it is lower than the reasonable collection potential. This figure is arrived at by the value of the taxpayer's property, cars, and bank accounts. It is used to determine how much a person should be able to pay.
Taxpayers should be wary of scams and offers that advertise settling debts for extremely low dollar amounts. An OIC agreement is never going to be that cheap.
There are only a few situations in which the IRS will consider an OIC. If there is doubt as to whether or not someone will be able to pay the full amount they owe in taxes, this type of settlement may be reached. If any doubt exists in the performance of the examiner, such as misinterpreting the law or not taking into account a taxpayer's evidence, this settlement may be an option.
Additionally, if extreme circumstances surround the taxpayer's situation, an OIC may be considered. If the amount of tax owed is correct and the tax payer is liable for that amount, an offer in compromise can still be accepted if paying the full amount would place someone in a state of economic hardship. Bills pertaining to the care of a dependent or medical bills may be a cause for this type of settlement.
If an offer in compromise is accepted, the taxpayer has several options for repayment. They can choose to pay the settlement in a lump sum of cash, a short term payment plan, or a deferred payment plan.
In order to file for an OIC, one must submit the application fee, initial payment, and Form 656. Usually, the application fee for this type of settlement will be around $150.
Someone considering this type of settlement should remember that the IRS will usually reject an offer from a taxpayer if it is lower than the reasonable collection potential. This figure is arrived at by the value of the taxpayer's property, cars, and bank accounts. It is used to determine how much a person should be able to pay.
Taxpayers should be wary of scams and offers that advertise settling debts for extremely low dollar amounts. An OIC agreement is never going to be that cheap.
There are only a few situations in which the IRS will consider an OIC. If there is doubt as to whether or not someone will be able to pay the full amount they owe in taxes, this type of settlement may be reached. If any doubt exists in the performance of the examiner, such as misinterpreting the law or not taking into account a taxpayer's evidence, this settlement may be an option.
Additionally, if extreme circumstances surround the taxpayer's situation, an OIC may be considered. If the amount of tax owed is correct and the tax payer is liable for that amount, an offer in compromise can still be accepted if paying the full amount would place someone in a state of economic hardship. Bills pertaining to the care of a dependent or medical bills may be a cause for this type of settlement.
If an offer in compromise is accepted, the taxpayer has several options for repayment. They can choose to pay the settlement in a lump sum of cash, a short term payment plan, or a deferred payment plan.
In order to file for an OIC, one must submit the application fee, initial payment, and Form 656. Usually, the application fee for this type of settlement will be around $150.
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Now that you know what it means to file that offer in compromise there are many other things pertaining to the OIC that we would like to tell you about now.