An Offer in Compromise or OIC is an agreement with the IRS or State taxing agency and the taxpayer that settles the taxpayer’s liabilities for less than the full amount owed. To qualify, the taxpayer must have filed all required tax returns (Under certain circumstances the IRS may not require you to file a tax return for a particular tax year). Qualifying for an Offer in Compromise may allow a taxpayer to only pay a very small fraction of what they owe, many times resulting in saving thousands of dollars.
The IRS may accept an OIC for one of the 3 following reasons:
This is directly from the IRS website:
“First, the IRS can accept a compromise if there is doubt as to liability. A compromise meets this criterion only when there’s a genuine dispute as to the existence or amount of the correct tax debt under the law.
Second, the IRS can accept a compromise if there is doubt that the amount owed is fully collectible. 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.
Third, the IRS can accept a compromise based on effective tax administration. An offer may be accepted based on effective tax administration 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.”
CNC is a hardship program offered to the IRS to taxpayers that cannot afford to make payments on the debt, effectively removing the balances from active collections. In other words, they stop trying to collect from you through traditional aggressive collection actions. Typically, the CNC program is easier to qualify for than the OIC, or Offer in Compromise, and the results can be just as effective without having to submit substantial documentation to the IRS, as is required with the OIC program.
If you receive a notice from the IRS, the bank, your employer or vendor, regarding a bank levy or wage garnishment or confiscation of receivables, you must act fast. Many times we can prevent the aggressive collection action before funds are intercepted. If the levy or garnishment is active we will act with urgent haste to release the encumbrance as soon as legally possible using every effective method available.
When you cannot pay your tax debt in full, the IRS may accept monthly installment payments to gradually pay your debt. Our single goal is to keep you lien free while qualifying you for the lowest possible monthly payment. Many taxpayers make the mistake of trying to negotiate a payment plan on their own. Don’t do it. In many cases we can obtain a PPIA, or Partial Pay Installment Agreement, or other types of payment plans much lower than an individual taxpayer can finalize on their own.
Also in some cases, to obtain the best results, we prefer the IRS know as little about your financial situation as legally possible. Being able to recognize tax cases where it benefits our clients Greenlaw Tax Group will negotiate a favorable Installment Agreement without disclosing any financial information whatsoever. Allow our firm to discuss your best options both short and long term.