Should you consider applying for an offer in compromise?

On Behalf of | Aug 30, 2021 | IRS Tax Law

Each year, many adults throughout Texas must file their taxes. Unfortunately, sometimes, it’s impossible to pay the IRS what you owe. If the IRS agrees that it’s impossible for you to fully pay off your debt, you may be able to present an offer in compromise (OIC). But before you can submit this offer, it’s helpful to put your best foot forward. Following is some information about how to maximize your odds of qualifying for an OIC.

What you need to know about an OIC

If you can’t pay your tax debt, the IRS may allow you to put forth an OIC. Before you can do this, you’ll need to meet certain eligibility requirements. These regulations have to do with your income, current expenses, and any assets you own. You’ll also need to pay an application fee to submit an OIC.

Increasing your odds of qualifying for this compromise

Unfortunately, the IRS doesn’t accept every application it receives from people seeking alternatives to a collection. Research shows that the IRS approves fewer than 50% of OIC applications it receives.

To increase your likelihood of the IRS accepting your offer, it’s critical to file any back tax returns. If your tax filings aren’t up to date, the IRS won’t accept your application. It’s also helpful if you can present a compelling reason for why you’re unable to pay your current tax debt. Lastly, try to avoid taking on more debt during the application process.

If individuals can’t pay their tax debt, the IRS allows them to submit an OIC. With that said, you’ll need to file an application and meet all eligibility requirements before qualifying for this form of tax-related assistance.