IRS Offer in Compromise - What is the Process?
The IRS has many programs available to taxpayers who have unpaid tax bills.
One of the most popular programs is called the IRS Offer in Compromise.
The IRS receives a substantial number of OICs each year, but has only limited processing capabilities in Memphis, TN and Brookhaven, NY (the two locations in charge of processing the offers).
The IRS has made great strides in improving the processing of OICs.
These efficiencies are making it easier for taxpayers to navigate the OIC process and enable them to receive responses in a timely manner.
When an OIC is submitted, the IRS will verify that it can process the offer.
The offer will be processed if the taxpayer has: (1) paid the $150 application fee; (2) filed all back tax returns; (3) is not actively involved in a bankruptcy proceeding; and (4) not been involved in an on-going audit.
During the verification stage of the IRS offer in compromise, the IRS examines all of the financial information that was provided by the taxpayer in the application.
Supporting documentation is reviewed and the financial claims (income, property ownership, etc) are analyzed.
If the IRS needs additional information they will generate an Offer Verification Letter that will be submitted to the taxpayer.
This letter requests the necessary documentation that the IRS needs to further process the return.
The taxpayer has a few weeks to respond with the requested items.
If the response is not timely, the IRS can return the offer and dismiss the offer if need be.
If the offer is returned, the IRS will not refund the processing fee.
The IRS then assesses the taxpayer's potential for collection.
As a result, the agency has the right to accept the IRS offer in compromise as it was submitted originally.
They often may send a letter summarizing the collection potential analysis.
The taxpayer has the right to respond to the analysis with any documentation necessary or can dispute the IRS findings.
The taxpayer also has the right to accept the IRS' analysis and agree to increase their offer to the amount that is shown in the analysis letter.
The IRS offer in compromise can be rejected outright after review of the analysis is completed.
If the taxpayer does not agree with the analysis, they have the right to file an appeal.
At this stage, the taxpayer can submit additional documentation (if needed) and make additional arguments in support of their position.
One of the most popular programs is called the IRS Offer in Compromise.
The IRS receives a substantial number of OICs each year, but has only limited processing capabilities in Memphis, TN and Brookhaven, NY (the two locations in charge of processing the offers).
The IRS has made great strides in improving the processing of OICs.
These efficiencies are making it easier for taxpayers to navigate the OIC process and enable them to receive responses in a timely manner.
When an OIC is submitted, the IRS will verify that it can process the offer.
The offer will be processed if the taxpayer has: (1) paid the $150 application fee; (2) filed all back tax returns; (3) is not actively involved in a bankruptcy proceeding; and (4) not been involved in an on-going audit.
During the verification stage of the IRS offer in compromise, the IRS examines all of the financial information that was provided by the taxpayer in the application.
Supporting documentation is reviewed and the financial claims (income, property ownership, etc) are analyzed.
If the IRS needs additional information they will generate an Offer Verification Letter that will be submitted to the taxpayer.
This letter requests the necessary documentation that the IRS needs to further process the return.
The taxpayer has a few weeks to respond with the requested items.
If the response is not timely, the IRS can return the offer and dismiss the offer if need be.
If the offer is returned, the IRS will not refund the processing fee.
The IRS then assesses the taxpayer's potential for collection.
As a result, the agency has the right to accept the IRS offer in compromise as it was submitted originally.
They often may send a letter summarizing the collection potential analysis.
The taxpayer has the right to respond to the analysis with any documentation necessary or can dispute the IRS findings.
The taxpayer also has the right to accept the IRS' analysis and agree to increase their offer to the amount that is shown in the analysis letter.
The IRS offer in compromise can be rejected outright after review of the analysis is completed.
If the taxpayer does not agree with the analysis, they have the right to file an appeal.
At this stage, the taxpayer can submit additional documentation (if needed) and make additional arguments in support of their position.
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