What To Do If You Do Not Qualify For An OIC
An Offer In Compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer’s tax liabilities for less than the full amount owed. The Internal Revenue Service (IRS) will accept an offer in compromise when it is unlikely that the tax liability can be collected in full and the amount offered reasonably reflects collection potential. However, taxpayers who can fully pay the liabilities through an installment agreement or other means generally won’t qualify for an OIC in most cases. As an expert in the field, Christopher G Carmona CPA, APC has written down the steps you can take if you do not qualify for an OIC.
Because the IRS will not consider an OIC if the taxpayer shows the ability to full-pay the liability within the time remaining on the statute, it is critical that they look at how much time remains on the collection statute and calculate if the taxpayer could fully pay the liability. To do this, one needs to look at the net equity calculated from assets and assume the taxpayer made their future income payments until the end of the statute. If the taxpayer’s equity in assets and future income will cover the liability within the time remaining, then the taxpayer is not considered eligible to file an OIC. The taxpayer would be required to get into an installment agreement.
A payment plan is an agreement with the IRS to pay the taxes they owe within an extended timeframe. You should request a payment plan if you believe you will be able to pay your taxes in full within the extended time frame. If you qualify for a short-term payment plan, you will not be liable for a user fee.
If you are looking for a CPA firm in diamond bar, CA, reach out to the expert at Christopher G Carmona CPA, APC. If you’ve received an IRS letter, or other tax correspondence from the IRS, a state agency, or a local agency, it can be difficult to know what to do next. I represent clients who owe IRS penalties, interest, and taxes. I offer my services across Diamond Bar, Los Angeles, Oceanside, Orange County, Riverside County, San Diego County, and the surrounding areas.
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