With the new tax filing season underway, it is certainly an appropriate time to consider what your options may be if you can’t pay your taxes.
You may have heard that the IRS has a program that can allow you to settle up for less than the full amount of tax debt that you owe. In this post, we will address the question of when it makes sense to consider making an offer in compromise (OIC).
One trend worth knowing about is that OIC acceptance rates by the IRS have been going up in the last few years. As Forbes reported last summer, the IRS accepted about 74,000 OICs in 2013, compared to only 64,000 the year before. In percentage terms, that was an increase from 38 to 42 percent.
This is undeniably a positive trend. After all, in the past decade acceptance rates were only around 25 percent. Seeking to promote greater use of the program, last year the IRS revised the application form, Form 656, last year. The IRS also tweaked the form for the required financial statement, Form 433A OIC.
Keep in mind, however, that getting a good deal on an OIC is not always as easy as it sounds when you hear about in an advertisement or from someone you know.
For one thing, the documentation you will be required to submit about your financial situation is very extensive. It will take a lot of time and effort to produce what the IRS wants.
The application fees for submitting an OIC are also considerable.
Even with hurdles like these, it still makes sense for you to seek an OIC to get past your tax debt. But this is a decision is best faced with the assistance of an experienced tax attorney. For more information, please visit our page on settling tax debt.