Solutions

IRS Tax Debt Settlements / Offer in Compromise Settlement

At Clarity Tax Resolutions, we specialize in negotiating Offer in Compromise (OIC) settlements and paying off IRS tax debt. With a team of former IRS agents who possess unmatched expertise and insider knowledge, we have been helping clients secure fair settlements since 1982.

For eligible taxpayers, the OIC process is simplified by the IRS’s Fresh Start Program. However, professional tax firms like Clarity Tax Resolutions have a higher success rate due to their in-depth knowledge of IRS regulations. Our experienced staff, including former IRS agents with OIC program experience, know what it takes to get an OIC accepted. We meticulously review all relevant information and your most recent financial statement before submitting an OIC. Trust our combined 60 years of expertise to guide you through the process.

The IRS provides a pre-qualifier tool to ensure taxpayers are eligible candidates and expedite the OIC process. Check your eligibility by visiting our homepage, selecting IRS forms, and using the pre-qualifier tool. Verifying your eligibility is crucial before working with any firm or tax expert.

An OIC is an agreement that settles tax liabilities for less than the full amount owed. To be eligible, you must have:

• Filed all your tax returns.
• Made all required estimated tax payments for the current year.
• Made all necessary federal tax deposits for the current quarter if you’re a business owner with employees.

The IRS will not accept an OIC if it is not greater than or equal to the reasonable collection potential (RCP), calculated by deducting basic living expenses from the value of your assets and projected future income.

The IRS may approve an OIC based on:

• Question about Liability: Serious uncertainty regarding the exact amount owed.
• Doubt about Collectibility: Insufficient assets and income to cover the tax obligation.
• Efficient Tax Administration: Extraordinary circumstances where full payment would cause financial hardship.

Use Form 656, Offer in Compromise, for doubts about collectibility or efficient tax administration. Include:

• Form 433-A (OIC), Wage Earners and Self-Employed Individuals Collection Information Statement
• Form 433-B (OIC), Business Collection Information Statement

For doubts about liability, use Form 656-L, Offer in Compromise (Doubt as to Liability).

Include Form 656 with a $150 application fee. Exceptions include doubt regarding liability cases and low-income individuals. Choose from:

• One-Time Deal: Payable over 24 months in five installments or less, plus a 20% nonrefundable payment.
• Periodic Payment Offer: Pay over 24 months in six or more monthly installments, starting with the first suggested installment.

While the OIC is under review, the IRS ceases additional collection actions. If approved, you must remain compliant for five years. Non-compliance risks default, resulting in the reinstatement of your debt with interest and penalties.

If your OIC is denied, you will receive a rejection letter with instructions for filing an appeal. You have 30 days to file an appeal. Some offers are returned rather than rejected due to missing requirements or incomplete information, with no opportunity for appeal.

The Fresh Start Program has made OICs more accessible by changing future income calculations and permitted expenses. This flexibility allows more taxpayers to receive relief through OIC. However, submitting an OIC gives the IRS comprehensive financial data that may be used for collection if the offer is denied or fails to close.

Understand that the IRS will conduct a thorough investigation, including:

• Complete Google lookup
• Review of credit reports
• Rapid response search engines
• License checks
• Lexis Nexis checks

Contact Clarity Tax Resolutions for clear answers and professional advice on OIC and tax debt settlements. Let us help you navigate the IRS negotiation process and secure a fair settlement. Schedule a free consultation now to start resolving your tax debt.