OIC Basic 1

BEGINNING on March 27, 2017, new offer in compromise (OIC) applications plus fee will be returned by IRS if all required income returns have not been filed unless there is a valid extension for the current year.

Is the OIC right for you? Here are some TIPS before choosing this option:

• Financial hardship. OIC is a valid option if you cannot settle your income tax liabilities in full. It allows you to pay an agreed amount less than the total amount of debt if you qualify the requirements.

• Current financial considerations. If your answer to (a), (b), (c), is NO, you may be eligible for OIC if you meet the other requirements: (a) You are able to pay? (b) Is your income higher than your expenses? (c) Do you have equity on your assets?

• Filing requirements. You must have filed all the filing requirements to be eligible for OIC. This includes: (a) filing of required federal income tax returns; (b) payments of required estimated tax payments; (c) if you are self-employed, have filed and remitted all federal tax deposits; (d) must maintain and remain to be in current status all of (a), (b), (c), while OIC is in process and upon approval.

• Bankruptcy. You do not qualify for OIC if you are currently in bankruptcy proceeding.

• OIC Pre-qualifier. It is highly recommended to utilize the OIC Pre-qualifier from the IRS website : https://irs.treasury.gov/oic_pre_qualifier/ before choosing this option.

• Submission of offer. Completing and submitting your OIC offer is not a guarantee that IRS will accept your offer.

• Submit your offer using Form 656

• Form 433-A for individual or

• Form 433-B for business,

• all pertinent supporting documents as required in the form,

• application fee,

• nonrefundable initial payment

• Options for non-refundable initial payment. You can either choose to do: (a) lump Sum cash, an initial payment of 20 percent of the total offer amount with your application and remaining balance due of the offer is paid in five or less payments upon acceptance of offer or 5 months or less of the date offer is accepted; or (b) periodic payment, an initial payment with your application continuously paying the remaining balance in monthly installments while the IRS considers the offer and upon acceptance continue to pay monthly until paid in full or within 6-24 months in accordance with the proposed offer terms.

• Understand the process. Understand that while the offer is under evaluation:

•  nonrefundable ayments and fees will be applied to your tax liability,

• notice of federal tax lien may be filed by the IRS,

• suspension of other collection activities,

• collection period is extended,

• fulfill all required payments and filings related to offer, and

• within two years of IRS receipt date if IRS does not make a determination, offer is presumed to be accepted.

Our next issue will discuss about what are your options if your offer is rejected and what are your compliance requirements if your offer is accepted.

.* * *

Disclaimer: Any accounting, business or tax advice contained in this communication is neither intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.

* * *

Al-os & Associates  Accountancy Corporation provides accounting and tax services to individuals, corporations, LLCs and business entities. The Firm has a niche in defending taxpayers audited by the IRS and other governmental agencies.  


No Comments Yet

Leave a Reply

Your email address will not be published.

The Filipino-American Community Newspaper. Your News. Your Community. Your Journal. Since 1991.

Copyright © 1991-2021 Asian Journal Media Group. All Rights Reserved.