An Offer in Compromise program is a great way to negotiate a tax debt with the Internal Revenue Service. However, the IRS rejects the majority of the offer( currently it's about 90 percent) while the granted taxpayer find themselves paying the IRS lots of money. The following paragraphs will give you useful tips to assist you successfully prepare the Offer in Compromise that would put an end to all of your tax problems.
Offer in Compromise Tip 1: Actual expenses and IRS standard expenses
Offer in Compromise prepared using only based on your actual expenses won't work best for you at all times. You need to know when the IRS will permit a taxpayer to claim expenses above the highest limit and when they won't. Where maximum permitted expenses are maxed or while arguing actual expenses, you must provide documentation and reasons for why applying local and national expense standards are inadequate for you personally. Bear in mind, an expense doesn't have to be essential for being considered necessary. Furthermore know when to utilize the IRS standards for calculating expenses since sometimes it could be more advantageous than applying actual expenses.
Offer in Compromise Tip 2: Asset Values
Search for all options to reduce or exclude equity in your assets. Avoid being lured to overvalue your personal assets. Be sure you claim the extra allowable deductions on the offer for cars of specific age and mileage (there exists one for diminishing vehicle equity and increasing vehicle operating costs). Look into the restrictions on withdrawing funds from your retirement account or taking loans, or converting equity in savings right into an arms-length future stream of income that won’t be regarded as a dissipated asset.
Offer in Compromise Tip 3: Collection Statute Expiration Date (CSED)/Statute Expiration
Depending on how long you currently have to go before the CSED, using the Statute of Limitations as leverage might work to your advantage. When the liability is near to expiring soon, the IRS might highly prefer approving your Offer in Compromise instead of gambling on should they recover the pending taxes through a monthly installment program.
Offer in Compromise Tip 4: Be ready to appeal in the event of rejection
In case if your Offer in Compromise is rejected by the IRS, the first thing to do is to analyze why it had been not approved. Mostly, the issue could be with the income and expenses tables the offer examiner prepared. Find out if there is anything inaccurate and arguable, since the examiner does not look at each issue as meticulously as we would like. Provide further arguments at that point when possible. It may be the point of getting accepted or going for appeal. Plus you can receive an alternative resolution through appeal.
The realities of OIC program
Receiving the optimum Offer in Compromise approved is both a science and an art. The above mentioned tips are just only the basics of outlining and you can find actually a lot more tricks of the trade. Getting to know on your own case can prove to be more costly in the long run than you ever imagined. Plus there are negative consequences when sending in an inappropriate OIC. Also, there may be a better solution for you personally. A professional representation from a tax legal professional really helps to ensure that your offer in compromise receives a much higher chance of getting processed and accepted.