Negotiate OIC/Tax Debt Settlements
Trust Dreis Tax Services for tax debt settlement with OIC negotiations.
Negotiate OIC/Tax Debt Settlements
5 Facts about the Offer in Compromise Settlements
- The average Offer in Compromise Settlement takes between 6- 9 months to work by the IRS,
- The average Offer in Comprise settlement is 14 cents on a dollar,
- 38% of all offers in compromise are accepted by the IRS,
- All accepted Offers in Compromise Settlements are a matter of Public record,
- The average time it take the IRS to work an Offer in Compromise is between 10 – 20 hours.
IRS Payment Plans
Over 6 million taxpayers enter into IRS payment plans, installment agreements, or monthly payments for back taxes each and every year.
To get into an IRS payment plan, taxpayers must complete and fully document IRS Form 433F, which you can find directly on our website.
The Internal Revenue Service will closely examine your income and expenses, comparing them to the national standards in the region you live in.
It is extremely important to hire a tax professional like Dreis Tax Services, who understands the system, to negotiate an IRS payment plan that is fair to both you and the Internal Revenue Service.
Taxpayers who are unrepresented may find that the IRS demands more than they are willing to pay. Don’t be bullied by the IRS; trust Dreis Tax Services to help you navigate this process.
Negotiate Offer in Compromise/Tax Debt Settlements
The Offer in Compromise Settlement Program
The new Fresh Start Program offered by the IRS is simplifying life for those who qualify for an Offer in Compromise Settlement. However, a professional tax company like Dreis Tax Services has a much better chance of getting Offers in Compromise accepted because we understand the guidelines set forth by the Internal Revenue Service.
The filing of an Offer in Compromise Settlement and settling back taxes involves more than just filling out the paperwork and submitting it to the IRS.
Our experienced staff, including tax professionals who have worked with the Offer in Compromise (OIC) program while at the IRS, have the necessary knowledge to guide Offers in Compromise through the system if you qualify for the program.
Before an Offer in Compromise is filed, all the facts and your current financial statement need to be reviewed.
Before you spend any money or waste your time, let our staff at Dreis Tax Services walk you through the process.
The Offer In Compromise Settlement
An Offer in Compromise (OIC) with Dreis Tax Services can be a viable option for settling your tax liabilities with the Internal Revenue Service for less than the full amount owed.
Here’s what you need to know to determine if you are eligible for an OIC:
- If your tax liabilities can be fully paid through an installment agreement or other means, you will most likely not be eligible for an OIC.
- You must have filed all tax returns, made all required estimated tax payments for the current year, and if you are a business owner with employees, made all required federal tax deposits for the current quarter.
- The IRS will not accept an OIC settlement unless the amount offered by the taxpayer is equal to or greater than what is termed as the “reasonable collection potential” (RCP).
- The RCP measures your ability to pay and includes the value that can be realized from assets like real property, automobiles, bank accounts, and other possessions. The RCP also factors in anticipated future income, minus specific amounts allowed for basic living expenses.
Navigating an Offer in Compromise can be complex, but Dreis Tax Services has the expertise to guide you through the process, ensuring that all requirements are met. Contact us to explore if this option might be suitable for your situation.
There is a New Pre-Qualifier Tool on our Website
To crack down on the number of offers in compromise that are filed, the IRS has released a new pre-qualifier tool to ensure that taxpayers are qualified and suitable candidates so they do not waste time and money filing an offer in compromise that has no chance of being accepted.
You can visit the homepage of Dreis Tax Services, click on IRS forms, and click on the pre-qualifier tool to walk through the information yourself to see if you qualify for an offer in compromise.
You should not give your money to any firm or tax professional, including Dreis Tax Services, unless you’re a truly qualified candidate for an offer in compromise.
The IRS may accept an Offer in Compromise Settlement based on three grounds.
Dreis Tax Services can assist with various grounds for accepting an Offer in Compromise, such as:
- Doubt as to Liability: Acceptance is possible if there is doubt regarding the liability. This ground is only met when genuine doubt exists under applicable law that the IRS has correctly determined the amount owed.
- Doubt as to Collectability: Acceptance is permitted if there’s doubt that the amount owed is fully collectible. This means that doubt as to collectibility exists in any case where the taxpayer’s assets and income are less than the full amount of the tax liability.
- Effective Tax Administration: Acceptance is allowed based on effective tax administration. An offer may be accepted on this ground when there is no doubt that the tax is legally owed and that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.
It should be noted that the acceptance of these offers can be very difficult, and working with Dreis Tax Services can provide you with the necessary guidance and expertise to navigate these complex situations.
Negotiate Offer in Compromise/Tax Debt Settlements
Submission of the Offer in Compromise Settlement
When working with Dreis Tax Services to submit an Offer in Compromise (OIC) based on doubt as to collectibility or effective tax administration, you must use the most current versions of the following forms:
- Form 656 (PDF), Offer in Compromise
- Form 433-A (OIC) (PDF), Collection Information Statement for Wage Earners and Self-Employed Individuals
- Form 433-B (OIC) (PDF), Collection Information Statement for Businesses
If you are submitting an OIC based on doubt as to liability, you must file a Form 656-L (PDF), Offer in Compromise (Doubt as to Liability), instead of Form 656 and Form 433-A (OIC) and/or Form 433-B (OIC).
Dreis Tax Services is here to guide you through these forms and ensure that your submission is correct and aligned with the requirements of the IRS. Feel free to contact us for support in navigating this complex process.
Application Fee for the Offer in Compromise Settlement
When working with Dreis Tax Services to submit an Offer in Compromise (OIC), it’s essential to note the application fee requirements:
A taxpayer must submit a $150 application fee with Form 656. This fee must not be combined with any other tax payments.
However, there are two exceptions to this requirement:
- No application fee is required if the OIC is based on doubt as to liability.
- The fee is not required if the taxpayer is an individual (not a corporation, partnership, or other entity) and qualifies for the low-income exception. This exception applies if the taxpayer’s total monthly income falls at or below 250 percent of the poverty guidelines published by the Department of Health and Human Services.
Section 4 of Form 656 contains the Low Income Certification guidelines to assist taxpayers in determining whether they qualify for the low-income exception. A taxpayer who claims this exception must complete section 4 of Form 656.
Dreis Tax Services is here to help you understand these requirements and ensure that your submission is in compliance with all applicable rules and regulations. Feel free to contact us for further assistance with your OIC application.
Selecting your Offer in Compromise Settlement Terms
The taxpayers are given the option to make the payment for the offer amount either in one go as a lump sum or in smaller installments.
A Lump Sum Offer Settlement
In the process of making an Offer in Compromise (OIC) with Dreis Tax Services, it’s crucial to understand the terms of a “lump sum offer.”
A “lump sum offer” is defined as an offer payable in 5 or fewer installments and within 24 months after the offer is accepted. When a taxpayer submits a lump sum offer through Dreis Tax Services, the taxpayer must include with Form 656 a nonrefundable payment equal to 20 percent of the offer amount. This payment is required in addition to the $150 application fee.
The term “nonrefundable” signifies that this 20 percent amount cannot be returned to the taxpayer, even if the offer is rejected or returned without acceptance. The 20 percent amount will be applied to the taxpayer’s tax liability, reducing the overall amount owed.
Furthermore, the taxpayer retains the right to specify the particular tax liability to which the IRS will apply the 20 percent amount. Dreis Tax Services can guide you through this process, ensuring that your lump sum offer is handled accurately and in accordance with all applicable rules.
Periodic Payment Offer in Compromise Settlement
In the context of working with Dreis Tax Services for a tax settlement, it’s important to understand the conditions of a “periodic payment offer.”
A “periodic payment offer” under the tax law is defined as an offer payable in 6 or more monthly installments and within 24 months after the offer is accepted. When submitting a periodic payment offer with Dreis Tax Services, the taxpayer must include the first proposed installment payment along with Form 656. This payment is necessary in addition to the $150 application fee.
Just like the 20 percent payment needed for a lump sum offer, this amount is nonrefundable. Moreover, during the time the IRS is assessing a periodic payment offer, the taxpayer must persist in making the installment payments specified in the terms of the offer.
These payments are also nonrefundable and will be applied to the tax liabilities. The taxpayer, through Dreis Tax Services, has the right to designate the particular tax liabilities to which these periodic payments will be applied, giving them control over how the payments are allocated.
Negotiate Offer in Compromise/Tax Debt Settlements
The Statutory Period of Time Rule
When working with Dreis Tax Services to engage in an Offer in Compromise (OIC) with the IRS, there are specific procedures and requirements to be aware of:
- The statutory time for IRS collection activities is usually halted during the period the OIC is under examination, and further suspended if the IRS rejects the OIC and the taxpayer, with the assistance of Dreis Tax Services, appeals the rejection to the IRS Office of Appeals within 30 days from the rejection notice date.
- If the IRS accepts the taxpayer’s offer through Dreis Tax Services, it anticipates that the taxpayer will remain in full compliance with the tax laws and will not incur any further delinquencies.
- Should the taxpayer fail to adhere to all the OIC’s terms and conditions, the IRS may deem the OIC to be in default. For OICs based on doubt as to collectibility and effective tax administration, the terms require the taxpayer to timely file all tax returns and pay all taxes for 5 years from the OIC acceptance date.
- If an OIC is determined to be in default, the agreement becomes null and void, and the IRS is then entitled to collect the original amounts owed, plus any applicable interest and penalties.
- Also, any refunds due to the taxpayer within the calendar year the offer is accepted will be allocated towards the outstanding tax debt.
It is through understanding and adherence to these specific conditions that Dreis Tax Services can guide taxpayers in successfully navigating the complexities of an Offer in Compromise.
If IRS rejects the Offer in Compromise Settlement
If the IRS rejects an Offer in Compromise (OIC) handled by Dreis Tax Services, the taxpayer will be notified by mail.
- The rejection letter will detail the reasons for the IRS’s decision, and Dreis Tax Services will help interpret these reasons and provide comprehensive guidance on how the taxpayer may appeal the decision to the IRS Office of Appeals.
- This appeal must be initiated within 30 days from the date of the rejection letter.
- In certain situations, an OIC may be returned to the taxpayer through Dreis Tax Services rather than being outright rejected. This could occur if the taxpayer has not provided necessary information, has filed for bankruptcy, failed to include the required application fee or nonrefundable payment with the offer, or neglected to file tax returns or pay current tax liabilities while the offer was under consideration.
- A return, in this context, is distinct from a rejection, as there is no right to appeal the IRS’s decision to return the offer.
By working with Dreis Tax Services, taxpayers can navigate these complexities and ensure that all proper procedures and requirements are followed in the OIC process.
The New Fresh Start Program by the IRS – Offers in Compromise Settlement (OIC)
The Offer in Compromise (OIC) program, facilitated by Dreis Tax Services, allows eligible taxpayers with outstanding and unpaid tax liabilities to negotiate a complete settlement for an amount less than the tax owed.
Dreis Tax Services understands that an OIC agreement is generally not accepted by the IRS if it believes that the liability can be paid through a lump sum or other payment arrangement. Therefore, the IRS meticulously reviews the taxpayers’ income, expenses, assets, and liabilities to determine their ability to pay.
Recently, to assist more struggling taxpayers, the IRS has shown more flexibility in what it considers “ordinary and necessary” expenses in determining a taxpayer’s net monthly income.
Under the “Fresh Start Program,” which Dreis Tax Services can help you navigate, the IRS has expanded the Allowable Living Expense Category to encompass additional expenses, such as credit card payments and bank fees, while raising the overall amount permitted. This program also recognizes expenses for student loan repayment and overdue state and local taxes, indicating a significant effort by the IRS to aid the financially troubled taxpayer.
One of the most consequential changes to the OIC program under the “Fresh Start” initiative is the modification in calculating the taxpayer’s “reasonable collection potential” (RCP) considering future income.
- RCP is assessed by examining the taxpayer’s net realizable equity in assets and prospective income.
- The IRS now considers only one year of future income for offers paid in full within five months, a substantial change from the previous four-year consideration.
- Similarly, offers paid in full within six to 24 months now consider two years of future income, down from five years.
These changes, understood and leveraged by Dreis Tax Services, can make a meaningful impact on determining whether taxpayers qualify for an OIC, particularly for those whose RCP is influenced more by future income rather than net realizable equity in assets.
Ultimately, these revisions and enhancements, along with the expertise provided by Dreis Tax Services, mean that an increasing number of financially distressed taxpayers will have the opportunity to qualify for OIC relief.
Negotiate Offer in Compromise/Tax Debt Settlements
Some Negative Implications
In addition to the favorable changes in the Offer in Compromise (OIC) program, there may still be negative consequences of filing an OIC that should be considered. Dreis Tax Services can help you navigate these complexities.
One potential drawback is that the information provided through the OIC process could furnish the IRS with a detailed financial roadmap. This information could then be used for seizure and enforced collection action if the offer is rejected, withdrawn, or the taxpayer defaults on the offer.
At Dreis Tax Services, we have insights that stem from tax professionals within our team. Any offer submitted to us during our time with the IRS provided a direct avenue to collect the tax if we rejected the offer. Based on the current financial statement provided by the taxpayer, every potential collection tool was available to us.
Therefore, it’s important to approach the OIC process with caution. With the guidance and expertise of Dreis Tax Services, you can better understand the potential risks and benefits and make an informed decision that best aligns with your financial situation.
What IRS will check if you submit an Offer in Compromise
When working with Dreis Tax Services on an Offer in Compromise (OIC), be fully aware that the IRS will conduct thorough research into your financial background. This includes:
- Conducting a full Google Search,
- Obtaining copies of your credit reports,
- Utilizing Accurint search engines,
- Pulling license searches,
- Possibly using Lexis Nexis for additional information.
Noteworthy is the fact that submission of an Offer in Compromise will automatically extend the statute of limitations for collection during the duration of the offer, plus 30 days. This extension gives the IRS more time to attempt to collect the full balance owed.
Navigating these processes and understanding the implications can be complex. Dreis Tax Services has the expertise to guide you through this procedure, ensuring that you are aware of all aspects related to an Offer in Compromise.
We will provide straightforward answers to questions about an Offer in Compromise.
- Does an Offer in Compromise apply to me?
- How much can I settle my tax debt for with the IRS?
- What are my Offer in Compromise payment options?
- What factors affect the settlement outcome with an Offer in Compromise?
Am I Eligible For An Offer In Compromise?
Important Information Regarding an Offer in Compromise through Dreis Tax Services:
- Compliance Requirement: You must be in compliance for two consecutive quarters (six months) before an offer can be submitted through Dreis Tax Services.
- Advantageous Settlement: An OIC with Dreis Tax Services can lead to a payment that is considerably less than what is actually owed. Once arranged, all principal and interest stop accruing, and most of the time, enforced collection is suspended.
- Post-Acceptance Obligation: A vital rule when working with Dreis Tax Services on an OIC is that you must remain current and compliant for five years following the acceptance of the offer.
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