If you owe back taxes to the IRS, you may have heard about the option of submitting an Offer in Compromise (OIC). This is a program that allows taxpayers to settle their tax debt for less than the full amount owed. However, the process of submitting an OIC can be complex and confusing. In this article, we will break down what happens after you submit an Offer in Compromise and what you can expect.
The first step in the OIC process is to determine if you are eligible. The IRS will consider factors such as your income, expenses, assets, and ability to pay when evaluating your offer. If you are eligible, you will need to submit a completed Form 656, along with a $205 application fee and an initial payment towards your offer amount. This payment is non-refundable and will be applied to your tax debt if your offer is accepted.
Review and Decision
After you send your offer, the IRS will evaluate your financial details. They will decide if your offer is fair considering your ability to pay. This process can take anywhere from 3-6 months, and the IRS may request additional information during this time. It is important to respond promptly to any requests to avoid delays in the decision-making process.
Acceptance or Rejection
After the review process is complete, the IRS will either accept or reject your offer. If your offer is accepted, congratulations! You will need to pay the remaining balance of your offer amount within 5 months to fully settle your tax debt. If your offer is rejected, you have the option to appeal the decision or make changes to your offer and resubmit it.
Many taxpayers have successfully settled their tax debt through the OIC program. For example, a small business owner in California was able to settle a $1.2 million tax debt for just $25,000 through an OIC. Another success story involves a couple in Texas who were able to settle their $300,000 tax debt for just $1,000. These are just a few examples of the SBA offer in compromise success stories of many taxpayers who have benefited from the OIC program.
SBA Offer in Compromise
In addition to the IRS OIC program, the Small Business Administration (SBA) also offers an OIC program for small business owners who owe back taxes. This program is specifically designed to help small business owners who are struggling to pay their tax debt. The SBA will work with the IRS to negotiate a reasonable offer amount and payment plan for the business owner.
The nation’s tax filing season has commenced, with the Internal Revenue Service (IRS) now accepting and processing 2023 federal tax returns. Taxpayers have until April 15 to file without an extension. The IRS anticipates receiving nearly 130 million individual tax returns by the deadline, with over 93% expected to be e-filed. Electronic filing and direct deposit are highlighted as the fastest and most convenient methods for filing and receiving refunds, with the IRS aiming to issue refunds within about three weeks after virtually filed returns.
Notable improvements have been implemented in the filing system, thanks to funding from the Inflation Reduction Act, offering enhanced digital correspondence, expanded Tax Assistance Center hours, reduced wait times at IRS call centers, and an improved “Where’s My Refund?” tool for taxpayers.
Submitting an Offer in Compromise can provide much-needed relief for taxpayers who are struggling with tax debt. By understanding the submission process and what to expect, you can increase your chances of success with an OIC. If you need help navigating the OIC process, consider seeking assistance from a tax professional who has experience with the program. With determination and perseverance, you can successfully settle your tax debt and move towards a brighter financial future.