Offer in Compromise is a tax settlement option which taxpayers can use to settle outstanding tax debt. Offer in Compromise may allow a New Hampshire taxpayer to make an offer to the IRS and if the IRS accepts the offer, the taxpayer’s outstanding tax debt will be settled. Many times the offer can be for much less than the full amount of IRS tax debt owed.

New Hampshire taxpayers will have to meet several requirements to qualify for an OIC and the IRS will only accept an Offer in Compromise if they are certain the taxpayer can not pay the full IRS debt with one lump sum payment or with an installment agreement. Most Offer in Compromise agreements are not accepted and the IRS will have sole authority to decide if they will accept all appeals or negotiate offers. If the OIC is denied, New Hampshire taxpayers will not have legal recourse against the IRS.

If an Offer in Compromise is accepted by the IRS penalties and interest will stop accruing, and the IRS will cease all collection efforts against the taxpayer. Offer in Compromise is one of several IRS tax settlement options and it can be time consuming and difficult to implement. Detailed information will be requested by the IRS and if the OIC is denied, the IRS can use this information to continue their collection actions. New Hampshire taxpayers who have outstanding tax debt or who have become the target of IRS collection effort should contact a tax professional for help.

Three types of Offer in Compromises:

New Hampshire taxpayers must meet one of the following conditions to qualify for Offer in Compromise:

1. Doubt as to Liability - The Internal Revenue Service will accept an Offer in Compromise if they believe there may have been an error in the calculation of the federal tax. Errors do not occur often, but they may occasionally happen as a result of an error in calculation, a misapplication of tax law or if the taxpayer provides additional tax information to the IRS.

2. Doubt as to Collectibility -  The Internal Revenue Service may be willing to accept an OIC if they doubt they will be able to collect the IRS tax debt either now or before the statutory period ends. If the cost to collect is considered too high, the IRS also may grant an Offer in Compromise.

3. Effective Tax Administration- The Internal Revenue Service may accept an Offer in Compromise if they believe New Hampshire taxpayers will experience a hardship which is “inequitable or unfair” if they pay their tax debt. This condition is generally applied to the elderly and handicapped.

Rejection of Offer in Compromise in New Hampshire

The IRS accepts approximately 20% of the initial OIC offers. All OIC offers which are denied can be appealed by New Hampshire taxpayers by writing a letter within 30 days from the date of the Offer in Compromise denial letter. The IRS will have sole authority to accept all Offer in Compromise appeals.

OIC denial letters must outline the reasons for the Offer in Compromise denial and if the IRS believes the offer was too low, the letter should also document an amount which the IRS considers reasonable. If the IRS refuses to provide the taxpayer with Offer in Compromise information the New Hampshire taxpayer can request the information under the Freedom of Information Act.

Appealing an Offer in Compromise in New Hampshire

The first step in the Offer in Compromise appeal process is to contact the IRS administrator who made the first denial decision. Negotiations with the administrator are not always successful, but sometimes they may be willing to work with the taxpayer to find a settlement amount which is agreeable to the IRS and the taxpayer. If the IRS administrator is not willing to negotiate then a formal appeal can be made to the Internal Revenue Service by sending an appeal letter within thirty-days from the date of the OIC denial letter.

The following information should be included in the OIC appeal letter:

• The social security number, name, address and telephone number of the New Hampshire taxpayer.
• Documentation from the New Hampshire taxpayer outlining the reasons for the Offer in Compromise appeal.
• A list of the items which the New Hampshire taxpayer would like to negotiate.
• A list of the tax periods or years in question.
• Documented evidence which support the New Hampshire taxpayer’s position.
• The OIC appeal letter must be signed by the New Hampshire taxpayer under penalty of perjury.

Offer in Compromise appeals can be negotiated and completed by the New Hampshire taxpayer without legal counsel, but if taxpayers want legal help they will need to hire a tax attorney, certified public accountant or an enrolled tax agent.

Completing an Offer in Compromise

New Hampshire taxpayers must complete all of the following tasks for an Offer in Compromise:

• All Offer in Compromise forms must be sent by the New Hampshire taxpayer to the IRS.
• All financial information must be sent to the IRS by the New Hampshire taxpayer including: employment records and vehicle information.
• All federal tax returns must be completed and filed on or before the federal tax deadline for the next 5 years.
• New Hampshire self-employed workers must file quarterly tax statements and make estimated federal tax payments each quarter.
• All IRS taxes must be paid by New Hampshire taxpayers for the next 5 years.
• All Offer in Compromise payments must be made to the IRS by New Hampshire taxpayers according to the OIC agreement.
• All federal tax refunds will be applied to the New Hampshire taxpayer’s debt for the calendar year that the OIC is accepted.

The IRS has the legal authority to cancel all OIC agreements if the New Hampshire taxpayer does not complete all of the OIC requirements. If the Offer in Compromise is cancelled the full amount of the IRS tax debt can be charged back to the New Hampshire taxpayer.

Offer in Compromise Forms

1. IRS Form 656- Offer in Compromise. New Hampshire taxpayers must complete Form 656 and send it to the Internal Revenue Service. This form will document the taxpayer’s ability to pay their IRS tax debt.
2. IRS Form 443 A- Collection Information Statement for Wage Earners and Self-Employed Individuals. New Hampshire taxpayers must send Form 443-A to the IRS to provide additional information to the IRS about their ability to repay their federal debt.
3. IRS Form 443-B- Collection Information Statement for Businesses. This form will only need to be completed and sent to the IRS by New Hampshire taxpayers if their business debt is included in the Offer in Compromise.
4. IRS Form 656-A- Income Certification for Offer in Compromise Application Fee and Payment. Form 656-A only needs to be completed by New Hampshire taxpayers if they are requesting an Offer in Compromise fee waiver.

Kentucky taxpayers who owe IRS back taxes may have the opportunity to settle their tax debt for a fraction of the total amount owed with an IRS tax settlement option. The most common plan available is Offer in Compromise or OIC. OIC allows a Kentucky taxpayer to make an “offer” to the Internal Revenue Service (IRS) outlining an amount of money they can pay. The IRS can either accept or reject the OIC offer. If the IRS accepts the offer it is considered a “comprise” and after meeting the terms of the Offer in Compromise, the Kentucky taxpayer’s debt is settled.

The Internal Revenue Service will accept an Offer in Compromise to help position the Kentucky taxpayer to fulfill their future tax liability and hopefully avoid an extended installment agreement.  The IRS not only has the authority to collect federal tax debt but also sole discretion to accept an OIC offer. The IRS accepts approximately 25% of OIC offers at the initial application level. More are accepted after negotiations and appeals. If the IRS rejects a Kentucky taxpayer’s offer, the taxpayer will not have legal recourse against the IRS and the IRS can use the detailed financial information they have collected to continue aggressive collections. Penalties and interest will also continue to accrue while the OIC offer is under consideration.

Kentucky residents who need information about Offer in Compromise can contact a tax professional. Offer in Compromise can be complicated, expensive and time consuming. Offer in Compromise is one of several tax settlement options available for taxpayers and may not be the best option for all Kentucky residents.

Qualifying for Offer in Compromise in Kentucky

Kentucky taxpayers who are considering Offer in Compromise must meet one of the following requirements:

Doubt as to Liability -  Kentucky taxpayers who question the amount of tax debt they have been assessed may qualify for an Offer in Compromise. This condition is not frequently met.

Doubt as to Collectibility - The Internal Revenue Service may agree to an Offer in Compromise if there is some question about their ability to collect the debt or if the cost to collect the federal tax debt is too high.

Effective Tax Administration-  Certain Kentucky residents may be granted an Offer in Compromise if paying their federal tax debt could cause an “economic hardship which would be inequitable or unfair”. This condition is most frequently accepted for the elderly and handicapped.

Rejection of Offer in Compromise in Kentucky

The Internal Revenue Service rejects approximately 80% of the Offer and Compromise offers it receives. Additional OIC offers are accepted after formal appeals and negotiations. The Internal Revenue Service must send written information about all OIC denials and if they consider the offer too low, the IRS should be willing to provide information about the amount they would accept. Kentucky residents who are appealing a denial must send a written letter to the IRS with in 30 days from the date of the denial letter. New Offer in Compromise forms will not need to be submitted unless the deadline has passed or the taxpayer’s financial information has substantially changed.

Appealing an Offer in Compromise in Kentucky

Kentucky residents may appeal an Offer in Compromise. Informal negotiations may be made by contacting the IRS administrator who made the first denial. The Internal Revenue Service may be willing to work with the Kentucky taxpayer to find an OIC amount which is acceptable to both parties. A more formal appeal can be made by writing a letter to the Internal Revenue Service within thirty days from the date of the Offer in Compromise denial letter.

Completing an Offer in Compromise

Kentucky taxpayers must complete the following tasks for an OIC:

• Taxpayers must submit Offer in Compromise forms and documents to the Internal Revenue Service. Documents may include: Kentucky taxpayer’s pay stubs, bank records, and vehicle information.
• The Internal Revenue Service federal tax returns must be filed on or before the federal tax deadline for the next five years.
• All self-employed Kentucky workers must submit estimated federal tax payments and file all federal tax returns each quarter.
• Kentucky taxpayers must pay federal tax payments (excluding the amount outlined in the OIC offer) for the next five years.
• Kentucky taxpayers must agree to pay the amount outlined in the OIC agreement.
• Kentucky taxpayers must agree to let the IRS keep all federal tax refunds and apply them to the tax debt prior to accepting the Offer in Compromise.
• The Internal Revenue Service will use all tax refunds to pay back taxes for the calendar year that the OIC is approved.

The Internal Revenue Service can legally revoke an Offer in Compromise and charge Kentucky taxpayers all of the taxes due for failing to meet the agreed upon terms of the Offer in Compromise.

Offer in Compromise Forms

1. IRS Form 656- Offer in Compromise. IRS Form 656 will provide financial information to the IRS about the Kentucky taxpayer’s financial status and their ability to repay their federal tax debt.
2. IRS Form 443 A- Collection Information Statement for Wage Earners and Self-Employed Individuals. Form 443-A provides additional financial information about the Kentucky taxpayer to the Internal Revenue Service about the taxpayer’s ability to pay their tax federal debt.
3. IRS Form 443-B- Collection Information Statement for Businesses. Form 433-B provides information to the Internal Revenue service about the Kentucky taxpayer’s business. Form 433-B is only needed if the business tax debt is included in the Offer in Compromise.
4. IRS Form 656-A- Income Certification for Offer in Compromise Application Fee and Payment. This form will only need to be submitted if the taxpayer is requesting a waiver for the Offer in Compromise.

Offer in Compromise or OIC is an agreement between the Internal Revenue Service (IRS) and the Hawaiian taxpayer which may allow the taxpayer to settle their IRS tax debt for less than the total amount owed.  The Internal Revenue Service will only accept an OIC offer if the taxpayer meets certain conditions and the tax amount can not be paid in full or through an installment agreement.

The IRS does not accept all OIC offers, in fact, they currently deny up to 80%.  The IRS may be willing to accept an offer if they believe it will put the taxpayer in a position to meet all future tax debt obligations.  Failure to pay tax debt can result in wage garnishment, property repossession or bank account levies.

Hawaiian taxpayers who are considering an Offer in Compromise may want to contact a tax professional. Offer in Compromise can be expensive, time consuming and difficult to implement. It is only one option for Hawaiian taxpayers and may not be the best option.

Three types of Offer in Compromises:

1. Doubt as to Collectibility - The IRS doubts the Hawaiian taxpayer will be able to pay the full amount of their tax debt within the statutory time for tax collection.

2. Doubt as to Liability- There must be a legitimate doubt that the amount of IRS tax debt assessed against the Hawaiian taxpayer is correct. This can occur if the IRS examiner made a mistake in the interpretation of the law, the IRS examiner did not consider all of the taxpayer’s financial evidence, or the Hawaiian taxpayer can produce new evidence for the IRS.

3. Effective Tax Administration- The amount of tax debt assessed is correct and the IRS may be able to collect the tax debt, but there is some extenuating circumstance which makes the IRS think payment of the tax debt would cause an economic hardship which is unfair or inequitable.

Rejection of Offer in Compromise in Hawaii

The Internal Revenue Service has been given sole authority to collect taxes and to determine if they will accept Offer in Compromise offers. If the IRS denies a Hawaiian taxpayer’s OIC offer, the taxpayer may be able to appeal the decision, but they will not have any other legal recourse against the IRS.

If the IRS denies an OIC offer they will send written notification to the taxpayer identifying the reason for the denial. If the IRS determines the OIC offer is too low, they may be willing to provide a counter offer or negotiate with the taxpayer to find an offer which is agreeable to both the government and the Hawaiian taxpayer. If the IRS does not provide Offer in Compromise information to the taxpayer this information can be requested under the Freedom of Information Act.

Appealing an Offer in Compromise in Hawaii

Informal negotiations can often be done by contacting the IRS administrator who made the first OIC denial decision. If a taxpayer wants to make a more formal appeal they will need to send written notice to the IRS within thirty-days from the date of the OIC denial letter.

The formal written request for an OIC appeal must have the following information:

• Social Security number, telephone number, name and address
• A statement that the taxpayer is appealing the IRS ruling to the Appeal’s office.
• A copy of the letter sent to the taxpayer and the taxpayer’s proposed changes or items that the taxpayer wants changed and what the taxpayer does not agree with and why.
• Document the tax periods or years in question.
• Identify any tax laws or other authorities which may support the position.
• Identify any facts that may support the position with which the taxpayer disagrees.
• The taxpayer must sign the written protest under penalty of perjury.

Hawaiian taxpayers may represent themselves for all OIC appeals, but taxpayers may want to talk to a tax professional such as a tax attorney, certified public accountant or enrolled agent who can answer OIC questions.

Completing an Offer in Compromise

Hawaiian taxpayers must complete the following tasks:

• Hawaiian taxpayers must complete all OIC forms and submit them to the Internal Revenue Service.
• Hawaiian taxpayers must submit all requested financial data to the Internal Revenue Service. Financial information includes: taxpayer’s pay stubs, banking and car information.
• Hawaiian taxpayers must complete and send all federal tax returns to the Internal Revenue Service on or before the federal tax deadline for the next five years.
• All self-employed Hawaiian taxpayers must pay their estimated IRS taxes and submit their federal tax returns every quarter.
• All tax payments (except the amount outlined in the OIC agreement) must be paid by Hawaiian taxpayers for the next five years.
• Hawaiian taxpayers must pay the amount outlined in the Offer in Compromise agreement.
• The IRS will apply any federal tax refund to the Hawaiian taxpayer’s tax debt for the calendar year that the OIC is approved.

The IRS has the authority to terminate an Offer in Compromise if all the terms and conditions of the agreement are not met. If the Offer in Compromise is terminated, the IRS can charge the taxpayer the original amount of tax debt.

Offer in Compromise Forms

1. IRS Form 656- Offer in Compromise. Hawaiian taxpayers must submit IRS Form 656 to the Internal Revenue Service to provide detailed financial information about the taxpayer and their ability to pay their tax debt.
2. IRS Form 443 A- Collection Information Statement for Wage Earners and Self-Employed Individuals. Form 443-A provides additional information about the Hawaiian taxpayer and their ability to pay their federal tax debt.
3. IRS Form 443-B- Collection Information Statement for Businesses. Hawaiian taxpayers will need to submit IRS Form 433-B to the Internal Revenue Service if a taxpayer’s business tax debt is included in the Offer in Compromise.
4. IRS Form 656-A- Income Certification for Offer in Compromise Application Fee and Payment. Hawaiian taxpayers who request an Offer in Compromise fee waiver must submit Form 565-A.