An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayerâ€™s tax liabilities for less than the full amount owed, based the ability by the taxpayer to pay currently and or can be settled with a payment plan for specific time frame.
There are three types of OICâ€™s that one might qualify for during a prequalifying review and they are as follows:
1. Doubt as to Collectability – Doubt exists that the taxpayer could ever pay the full amount of tax liability owed.
2. Doubt as to Liability – A legitimate doubt exists that the assessed tax liability is correct. Possible reasons are if (1) the examiner made a mistake interpreting the law, (2) the examiner failed to consider the taxpayerâ€™s evidence or (3) the taxpayer has new evidence.
3. Effective Tax Administration – There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed, but an exceptional circumstance exists that would allow the IRS to consider an OIC.
Example: Mr. & Mrs. Taxpayer have assets sufficient to satisfy the tax liability and provide full time care and assistance to a dependent child, who has a serious long-term illness. It is expected that Mr. and Mrs. Taxpayer will need to use the equity in assets to provide for adequate basic living expenses and medical care for the child. There is no doubt that the tax is correct and Tax Fixers Network can assist you to file for an OIC.
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