Processing times vary, but you can expect it to take at least six months for the IRS to decide whether to accept or reject your compromise offer (OIC). The process can take much longer if you have to challenge the examiner's findings or appeal your decision. In most cases, the IRS will not accept an OIC unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (RCP). CPR is the IRS's way of measuring a taxpayer's ability to pay.
The RCP includes the value that can be obtained from the taxpayer's assets, such as real estate, cars, bank accounts and other assets. In addition to property, the RCP also includes anticipated future income minus certain amounts allowed for basic living expenses. It usually takes six to nine months for the IRS to respond to your offer in a commitment request. Staff, funding and the time of year when the OIC is presented influence the time needed for the decision-making process.
If more than two months have passed, you should check with the IRS to see how the process progresses. It's common for the IRS to take up to six months to make a decision. Some decisions may take longer than a year. If you owe back taxes to the IRS or have a major bill you can't pay, you have options.
The IRS isn't going anywhere, but if you work with them, they can help you resolve your tax debt. One such way to resolve back taxes is the compromise offer. The commitment offer process is a way to pay less tax debt than you owe. Wiztax's free online system guides you through the pledge offer process and provides you with helpful tips and suggestions at every step of the process.
Start by answering simple questions about taxes. Wiztax then calculates the amount of your commitment offer and completes all of the IRS OIC forms for you. Our Wiztax experts have decades of experience in tax law and the IRS, and are always available to answer tax questions, help with the pledge offer process, and review all IRS OIC forms before filing them. We know what questions to ask so that the IRS receives the most complete and accurate information needed to make a decision about your compromise offer.
You can rest easy knowing that all your questions, from the simplest to the most complex, will be answered. The taxpayer has the right to specify the particular tax liability to which the IRS will apply the 20 percent payment. This amount is called the offer amount and represents an estimate of how much the IRS will accept to settle a tax bill. Remember that if a licensed tax professional doesn't think you're a good candidate for a compromise offer, they'll help you find the next best option for you to resolve your taxes with the IRS.
From the date the offer is accepted, no additional interest will be added to your tax debt or to the amount of the accepted offer. Jim is also the author of the Tax Problems and Solutions Manual, a publication intended to help tax professionals work more effectively on post-tax issues and to resolve their clients' most common tax problems. The refund that is withheld as part of the offer agreement applies to the total tax debt and is not considered a payment of the amount of the accepted offer. The OIC, out of doubt as to collectability, is for people who are unlikely to be able to pay the IRS before their collection statute expires (usually 10 years after the date the IRS evaluates the tax).
Generally, the IRS will only reduce your tax debt if you convince the agency that your offer is the most you're likely to receive. As part of the accepted offering agreement, the IRS will keep any refund, including interest, of taxes due until the date the IRS accepts the offer. Generally, the statutory period within which the IRS may engage in collection activities is suspended for the period in which the OCI is pending, for the 30 days immediately following the rejection of an OIC by the IRS, and for the period in which the IRS Independent Office is considering appealing. Timely rejection.
Of appeals. The partial installment agreement allows you to pay the IRS monthly, but your full payment will not cover your full tax bill before the collection law expires. If the IRS accepts the taxpayer's offer, the taxpayer will have agreed to fully comply with tax laws. Most people will not qualify for an OIC unless they have filed all tax returns and made all the estimated tax payments required for the current year (if applicable).
However, the IRS will release the tax lien 30 days after the payment terms are met and the payment is verified. The IRS will keep any refund, including interest, that may be due on tax returns filed up to the date the IRS accepts the offer. . .