Many taxpayers who have been walloped with a huge tax bill would jump at the chance to make an Offer in Compromise (OIC). An OIC allows taxpayers to negotiate with the IRS to reduce their bills and make them payable over a period of time. However, negotiating an OIC isn’t a simple process, and it comes with two significant downsides.
First, the IRS will only grant you an OIC after it examines your financial records in detail and determines that you are, in fact, unable to pay the full amount. This can be the tax equivalent of a root canal, as the IRS examines the value of your savings accounts, home, annuities, and other assets. Plus, you’ll have to ship all those records to the tax examiner at your own expense.
Second, after examining the evidence, the IRS isn’t obliged to grant your request for an OIC, and can actually use the reams of documentation you sent to reinforce its case and demand payment in full. In this case, further attempts at an OIC will be fruitless, and you’ll either be compelled to pay the full amount of your bill or settle the issue in some other way.
Only an experienced tax attorney can tell you whether an OIC is appropriate for your situation, and whether the payoff of an OIC is worth allowing the IRS to put your assets under a microscope. Call the tax experts at Travis W. Watkins, PC at (800) 721-7054 for a free consultation.