All taxpayers who have outstanding tax debt may be able to find relief through Offer in Compromise, one of the IRS most popular methods for settling IRS tax debt. Offer in Compromise or OIC may allow North Carolina taxpayers to make a settlement offer to the IRS for a fraction of the total amount of tax owed. If the Internal Revenue Service accepts the offer or “compromise” the tax debt outlined in the OIC is considered settled.

The IRS will not accept all OIC offers. OIC offers will only be accepted if the IRS concludes the tax debt can not be paid in a lump sum payment or through an installment agreement. The IRS currently denies approximate 80% of first time OIC offers but may accept more after negotiations or a formal appeal is made.

North Carolina taxpayers who are the target of aggressive IRS collection actions or who have outstanding tax debt should contact a tax professional for help. Failure to pay federal tax debt can result in wage garnishments, property repossession, fines, bank levies or imprisonment.  Offer in Compromise can be expensive, difficult to implement, and time consuming. OIC is one of several IRS tax settlement options and may not be right choice for all North Carolina taxpayers.

Three types of Offer in Compromises:

1. Doubt as to Liability –  If the Internal Revenue Service believes the amount of tax assessed against a North Carolina taxpayer could be incorrect, they may be willing to accept an Offer in Compromise. This condition does not occur often, but could occur if there was an IRS miscalculation, the tax laws were applied incorrectly or additional information is supplied by the taxpayer.

2. Doubt as to Collectibility –  If the IRS does not think they will be able to collect the IRS tax debt before the statutory period ends they may be willing to accept an Offer in Compromise. Additionally, this condition could be applied if the cost to collect the debt is considered too high.

3. Effective Tax Administration- North Carolina taxpayers who are unable to pay their IRS tax debt without suffering a hardship which would be considered “inequitable or unfair” may qualify for an Offer in Compromise. This condition is generally applied to the elderly and handicapped.

Rejection of Offer in Compromise in North Carolina

The federal government has given the IRS the authority to accept and deny Offer in Compromise offers. Most OIC offers are denied and the North Carolina taxpayer does not have the ability to sue or pursue any legal action against the IRS to compel them to accept the offer.

The Internal Revenue Service will send a written letter to the North Carolina taxpayer if they deny the Offer in Compromise. This denial notice should detail the reason the OIC has been denied and if the offer was considered too low the letter should list the amount the IRS would consider reasonable. If the IRS refuses to provide North Carolina taxpayers information about their Offer in Compromise, taxpayers can obtain this information under the Freedom of Information Act.

Appealing an Offer in Compromise in North Carolina

Negotiations usually can begin with the IRS administrator who first denied the OIC application. If the administrator is unable or unwilling to negotiate to find an agreeable offer, a more formal appeal can be made by writing a letter to the IRS within 30 days from the date of the OIC denial letter.

The Offer in Compromise appeal letter should contain the following information:

• The North Carolina taxpayer’s social security number, name, address and telephone number.
• A copy of the statement from the North Carolina taxpayer detailing the reasons they are appealing the OIC denial.
• A list of the proposed changes or items that the North Carolina taxpayer wants changed.
• Documentation which provides information on the tax periods or years in question.
• Documentation about the federal tax laws or any other facts which may support the North Carolina taxpayer’s position.
• The appeal’s letter must be signed by the North Carolina taxpayer under penalty of perjury.

The IRS will allow the North Carolina taxpayer to represent themselves for all Offer in Compromise negotiations and appeals. If the North Carolina taxpayer prefers to seek legal counsel they must get help from an enrolled tax agent, a tax attorney or a certified public accountant.

Completing an Offer in Compromise

The following tasks must be completed by the North Carolina taxpayer:

• All OIC documentation must be completed and sent to the Internal Revenue Service by the North Carolina taxpayer.
• All requested financial information must be submitted to the IRS by the North Carolina taxpayer. Requested Information may include: a North Carolina taxpayer’s employment information, banking and vehicle information.
• All federal tax returns must be completed and sent to the Internal Revenue Service on or before the tax deadline for the next 5 years.
• All self-employed North Carolina taxpayers must make estimated federal tax payments and submit their federal tax returns every quarter to the IRS.
• All IRS taxes must be paid by North Carolina taxpayers for the next five years.
• North Carolina taxpayers must pay all tax payments outlined in the OIC agreement.
• The IRS will apply all tax refunds to the North Carolina taxpayer’s federal tax debt for the calendar year that the OIC is accepted.

If North Carolina taxpayers do not meet all of the Offer in Compromise requirements the OIC can be cancelled and the full amount of federal tax debt reinstated.

Offer in Compromise Forms

1. IRS Form 656- Offer in Compromise. North Carolina taxpayers must submit Form 656 to the IRS to document their ability to pay their IRS tax debt.
2. IRS Form 443 A- Collection Information Statement for Wage Earners and Self-Employed Individuals. North Carolina taxpayers must send Form 443-A to the IRS to provide additional information about their ability to repay their federal tax debt.
3. IRS Form 443-B- Collection Information Statement for Businesses. North Carolina taxpayers must send Form 433-B to the IRS if their business debt is part of their Offer in Compromise.
4. IRS Form 656-A- Income Certification for Offer in Compromise Application Fee and Payment. North Carolina taxpayers must send Form 565-A if they are requesting an OIC fee waiver.

Utah taxpayers who have outstanding IRS tax debt may have several available IRS tax settlement options they can use to settle their debt. Offer in Compromise or OIC is one of the most popular options and may allow the taxpayer to make a tax settlement offer to the IRS to settle federal tax debt for a fraction of the full amount of taxes owed. The IRS does not accept all OIC offers, but if they do accept the offer, all tax debt outlined in the OIC will be considered settled.

The IRS will only accept an OIC if a Utah taxpayer can not pay a one lump sum payment or if the taxpayer can not qualify for an installment agreement. If the IRS denies the Offer in Compromise they may be willing to negotiate with the taxpayer or review the OIC denial through a formal OIC appeal. The IRS has the authority not only to collect federal taxes to but to determine what tax amount will settle the tax debt. The Utah taxpayer will not be able to sue or file a lawsuit against the IRS.

Utah taxpayers who do not pay their outstanding tax debt may become the target of IRS collectors and may face wage garnishments, repossessions, bank account levies or imprisonment. It is not a good idea to ignore the IRS. All Utah taxpayers who have IRS back tax debt and need more information about Offer in Compromise or other IRS tax settlement options should contact a tax professional for more information. Offer in Compromise can cost a lot of money to implement, require the taxpayer to send detailed information to the IRS and can be time consuming. Offer in Compromise may not always be the best solution for all Utah taxpayers.

Three types of Offer in Compromises:

The IRS does not accept all Offer in Compromise applications. Utah taxpayers must meet certain criteria to qualify for an OIC:

1. Doubt as to Liability – If the amount of IRS tax debt is in question the IRS may be willing to accept an Offer in Compromise. Errors can occur if the IRS made a calculation error, misapplied the federal tax laws or did not consider all of the taxpayer’s financial information. Errors in the tax amount are not common.

2. Doubt as to Collectability – If the tax amount can not be collected either now or in the future the IRS may be willing to accept an Offer in Compromise. Under this condition the amount of debt is not in question. The Internal Revenue Service also may accept an OIC if they think it will cost them too much to collect the tax debt.

3. Effective Tax Administration- If a taxpayer can not pay their tax debt with out experiencing an economic hardship which is unfair or inequitable the IRS may accept an Offer in Compromise. The elderly and handicapped most frequently use this condition.

Rejection of Offer in Compromise in Utah

The IRS has the authority to make the final decision on all Offer and Compromise agreements. Utah taxpayers may be able to appeal the decision, but if the IRS is not willing to accept the appeal, the Utah taxpayer can not file suit against the IRS in court.

If an Offer in Compromise is denied the IRS is required to send the Utah taxpayer an OIC denial letter detailing the reason the request was denied. Most OIC requests are denied because the IRS believes the OIC offer was too low. The IRS may be willing to negotiate with the Utah taxpayer to find an OIC offer which both parties find agreeable. If the Internal Revenue Service refuses to provide the Offer in Compromise documentation to the taxpayer, this information can be requested under the Freedom of Information Act.

Appealing an Offer in Compromise in Utah

Negotiations for OIC denials frequently begin by contacting the IRS administrator who reviewed the initial OIC offer. If the administrator is unwilling or unable to negotiate a new offer, the Utah taxpayer can make a formal appeal by sending a written letter to the IRS within 30 days from the date of the OIC denial letter. Utah taxpayers must include the following details in their OIC appeal’s letter:

• Utah taxpayer’s social security number, full name, address and telephone number
• The Utah taxpayer must make a statement detailing the reasons they are appealing the OIC denial.
• The Utah taxpayer should include a copy of the letter sent by the IRS and provide a list of the proposed changes or items that the taxpayer wants updated and the reasons why.
• The taxpayer must document the tax periods or years in question.
• The taxpayer should include any federal tax laws or other details which may support their position.
• The letter must be signed by the Utah taxpayer under penalty of perjury.

All negotiations and Offer in Compromise appeals can be done without the help of a tax professional, but it may be a good idea to contact someone who has experience negotiating settlements. Utah taxpayers who seek outside legal counsel should contact a tax professional who is a certified public accountant, an enrolled tax agent or a tax attorney.

Completing an Offer in Compromise

Utah taxpayers must also complete the following Offer in Compromise tasks:

• All OIC paperwork must be completed and sent to the IRS by the Utah taxpayer.
• Personal financial information must be sent to the IRS when it is requested. The IRS may request information about the taxpayer’s employment, bank records or vehicle information.
• Federal tax forms must be sent to the IRS on or before the tax deadline each year.
• Utah workers who are self-employed must make estimated tax payments to the IRS each quarter.
• All federal taxes must be paid by Utah taxpayers for the next five years.
• All OIC payments must be made per the Offer in Compromise agreement.
• The Internal Revenue Service will apply all tax refunds to the Utah taxpayer’s IRS debt for the calendar year that the OIC is accepted.

Failure to comply with the Offer in Compromise requirements may cause the IRS to terminate the Offer in Compromise agreement. If the IRS terminates the OIC agreement the full amount of IRS tax debt may be reinstated.

Offer in Compromise Forms

1. IRS Form 656- Offer in Compromise. Utah taxpayers must submit IRS Form 656 to the IRS so the IRS can identify the taxpayer’s ability to pay their tax debt.
2. IRS Form 443 A- Collection Information Statement for Wage Earners and Self-Employed Individuals. Utah taxpayers must send IRS Form 443 A to the IRS to provide additional information on their ability to repay their tax debt.
3. IRS Form 443-B- Collection Information Statement for Businesses. Utah taxpayers must send IRS Form 433-B to the IRS if their business tax debt is included in their Offer in Compromise.
4. IRS Form 656-A- Income Certification for Offer in Compromise Application Fee and Payment. Utah taxpayers must submit IRS Form 565-A only if they are requesting an OIC fee waiver.

Indiana taxpayers who owe the IRS back taxes may be able to use one of their IRS tax settlement options to settle their debt. One of the most popular of these programs is Offer in Compromise or OIC. Offer in Compromise can be complicated and time consuming, but in many cases the IRS may be willing to accept much less than the total amount of taxes owed to settle tax debt.

Offer in Compromise allows the Indiana taxpayer to make an offer to the IRS. If the IRS accepts the offered amount, the debt outlined in the OIC will be settled. Penalties and interest will continue to accrue while the IRS is considering the OIC.  The IRS frequently will consider an Offer in Compromise to help taxpayers improve their chances of meeting future tax debt and eliminate the need to accept an installment agreement or declare taxes as not collectible.

Most Offer in Compromise offers are not accepted. More may be accepted after negotiations or on appeal. The IRS will only accept an offer if there is doubt as to the amount of debt assessed, doubt as to the ability of the IRS to collect the tax debt, or payment of the debt will cause the taxpayer hardship which is unfair or inequitable. If the IRS denies the Offer in Compromise offer, they can use the information they have collected to collect an Indiana taxpayer’s past tax debt.

Offer in Compromise is one of several IRS tax settlement options available to Indiana taxpayers. Tax professionals such as an enrolled agent, tax attorney or certified public accountant can provide information and details about IRS tax settlement plans.

Qualifying for Offer in Compromise in Indiana

Not all Indiana taxpayers who request an Offer in Compromise will be eligible to receive one. To qualify for an OIC taxpayers must meet one of the following conditions:

Doubt as to Liability – Indiana taxpayers who can prove the amount of taxes they have been charged is incorrect may qualify for an OIC. Errors in debt calculation can occur from an IRS miscalculation or new financial information from the taxpayer. This qualification is seldom met.

Doubt as to Collectibility -  The amount of tax debt is not in doubt, only the ability of the IRS to collect the debt now or in the future. The IRS may also accept an OIC under this condition if they believe the cost to collect the debt is too high.

Effective Tax Administration- Indiana taxpayers, under certain conditions, may experience an inequitable or unfair hardship if they pay their tax debt. If the IRS agrees they may qualify for an OIC.  The elderly, individuals with physical or mental disabilities or individuals who have expensive medical bills most frequently meet this condition.

Rejection of Offer in Compromise in Indiana

Offer in Compromises may be rejected up to 80% of the time by the IRS. The IRS allows negotiations and appeals, but the federal government has given them sole authority to determine if an OIC offer will be accepted. If the IRS denies an OIC, the taxpayer will not have legal recourse.

The IRS must send a written letter to the Indiana taxpayer outlining why the OIC offer was declined. The IRS most frequently denies OIC offers because they believe the offer is too low. The IRS should be able to provide an amount to the Indiana taxpayer which the IRS would be willing to accept.

All OIC appeals must be made to the Internal Revenue Service within 30 days from the date of the Offer in Compromise denial letter. Indiana taxpayers must submit new OIC forms if the OIC deadline has expired or if the taxpayer’s financial information has substantially changed. If the IRS refuses to provide information to the taxpayer, information can be requested under the Freedom of Information Act.

Appealing an Offer in Compromise in Indiana

Negotiations for an Offer in Compromise can usually be made by contacting the IRS administrator who denied the first OIC offer. Formal appeals can also be made by Indiana taxpayers by sending a written letter to the IRS within 30 days from the date of the OIC denial.

Completing an Offer in Compromise

Indiana taxpayers must complete the following tasks for an Offer in Compromise:

• Offer in Compromise forms must be completed and submitted to the IRS.
• Financial information which is requested by the IRS must be submitted in a timely fashion. Financial information may include: Indiana taxpayer’s pay stubs, banking records, and vehicle information.
• Indiana taxpayers must file all federal tax returns on or before the tax deadline for the next five years.
• All self-employed Indiana taxpayers must pay their estimated federal tax payments and file their tax returns every quarter.
• All federal tax payments (except the amount outlined in the Offer in Compromise) must be paid for the next five years.
• Indiana taxpayers must pay the amount outlined in the Offer in Compromise.
• All refunds will be applied to the Indiana taxpayer’s tax debt before the Offer in Compromise offer is accepted.
• The IRS will apply any refund to the Indiana taxpayer’s tax debt for the calendar year that the Offer in Compromise is approved.

If the Indiana taxpayer does not meet all of the requirements in their Offer in Compromise, the IRS has the legal authority to terminate the Offer in Compromise and charge the Indiana taxpayer the total amount of tax debt.

Offer in Compromise Forms

1. IRS Form 656- Offer in Compromise. Indiana taxpayers must complete and submit IRS Form 656 to the Internal Revenue Service to provide information about 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 financial information to the IRS about the status of the Indiana taxpayer.
3. IRS Form 443-B- Collection Information Statement for Businesses. Form 433-B provides information to the IRS about the Indiana’s taxpayers business. This form must be submitted if the business tax debt is part of the OIC.
4. IRS Form 656-A- Income Certification for Offer in Compromise Application Fee and Payment. Indiana taxpayers must submit this form if they are requesting an OIC fee waiver.

Nevada taxpayers can settle IRS tax debt with Offer in Compromise, a program established by the Internal Revenue Service (IRS). Offer in Compromise allows Nevada taxpayers to make an offer to settle their tax debt. The IRS may either accept or reject the offer. If the IRS accepts the offer, all the debt outlined in the Offer in Compromise is considered settled. Offer in Compromise allows the IRS to avoid declaring debt as currently not collectible or accepting a protracted installment agreement. OIC will allow the IRS to accept an amount to settle tax debt which is generally much less than the full amount owed and hopefully put the taxpayer in a financial position to meet all future tax liabilities.

The IRS has sole discretion to accept or reject all Offer in Compromise offers. They will only accept an OIC if they believe they will not be able to collect the debt from the Nevada taxpayer, paying the debt will cause substantial financial hardship to the taxpayer or if there is question about accuracy of the amount owed. Currently the IRS accepts approximately 25% of the OIC offers. More are accepted after negotiations or an appeal. If the IRS declines the OIC offer, they will be able to use the detailed financial information they have gathered to proceed with debt collection against the Nevada taxpayer. Penalties and interest will continue to accumulate while the IRS reviews the Offer in Compromise agreement.

Offer in Compromise can be complicated and expensive. All Nevada taxpayers who are considering an Offer in Compromise should contact a tax professional such as an enrolled agent, certified public accountant or tax attorney for more information. The IRS offers many options to settle taxes and OIC may not be the best option for all Nevada taxpayers.

Qualifying for Offer in Compromise in Nevada

All Nevada taxpayers must meet one of the following criteria to qualify for an OIC:

Doubt as to Liability – The taxpayer may qualify for an OIC if they can prove there was an error in calculation of the debt, an error in interpretation of the tax law, or new information has surfaced which can prove the tax liability was assessed incorrectly. This qualification is not frequently met.

Doubt as to Collectibility -  This qualification differs from the first. The amount of debt calculated and owed is not in question, just the ability of the Internal Revenue Service to collect the debt.

Effective Tax Administration- Nevada taxpayers who can prove that paying their tax debt will cause an economic hardship which would be inequitable or unfair may qualify for an OIC. This condition is most frequently accepted for the elderly and handicapped.

Rejection of Offer in Compromise in Nevada

The Internal Revenue Service denies approximately 25% of all OIC offers at the application level. More are accepted after negotiations or appeals. If the IRS denies a Nevada taxpayer’s OIC offer, they are required to send a written letter detailing the reasons the offer was not accepted. The IRS should be able to provide to the taxpayer a compromise settlement amount which they consider reasonable. Nevada taxpayers must resubmit the Offer in Compromise forms if their financial information has substantially changed or if the appeal’s deadline has passed. If the IRS refuses to provide the OIC information to the Nevada taxpayer, the Nevada taxpayer can request the information under the Freedom of Information Act.

Appealing an Offer in Compromise in Nevada

Nevada taxpayers can make an informal appeal to the IRS administrator who made the first OIC denial decision to reconsider or renegotiate an offer. If informal negotiations fail, Nevada taxpayers can make a formal appeal by writing a letter to the IRS within 30 days from the date of the Offer in Compromise denial letter. It is not unusual for the IRS to willingly negotiate to find a tax settlement amount which is agreeable to both the IRS and the Nevada taxpayer.

Completing an Offer in Compromise

Nevada taxpayers must complete the following tasks to qualify for an Offer in Compromise:

• All OIC forms must be submitted in a timely fashion as requested by the IRS. Documents and financial forms may include: Nevada taxpayer’s pay stubs, bank records, and vehicle information.
• All federal tax returns must be filed by the Nevada taxpayer on or before the federal tax deadline for the next five years.
• All self-employed Nevada taxpayers must make estimated federal tax payments and file all IRS tax returns each quarter.
• Nevada taxpayers must pay all of their federal tax payments (excluding the amount outlined in the OIC offer) for the next five years.
• Nevada taxpayers must pay the amount outlined in the Offer in Compromise agreement.
• The Internal Revenue Service will keep all IRS tax refunds and apply them to the tax debt prior to submitting the OIC.
• Any tax refund which would be made to the Nevada taxpayer for IRS back taxes for the calendar year that the OIC is approved will be paid toward the outstanding tax debt.

The IRS has full legal ability to cancel or revoke the OIC agreement if a Nevada taxpayer fails to meet all of the requirements of the agreement.  The IRS can also reinstate the full amount of tax owed.

Offer in Compromise Forms

1. IRS Form 656- Offer in Compromise. IRS Form 656 provides financial information to the Internal Revenue Service about the Nevada taxpayer, their financial status 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 Nevada taxpayer’s ability to pay their tax debt to the IRS.
3. IRS Form 443-B- Collection Information Statement for Businesses. Form 433-B provides information to the IRS about the Nevada resident’s  business. Form 443-B will only need to be included with the OIC offer if Nevada taxpayer is including their business tax debt in the offer.
4. IRS Form 656-A- Income Certification for Offer in Compromise Application Fee and Payment. Form 656-A will only have to be submitted to the IRS if the Nevada taxpayer is requesting the Offer in Compromise fee waiver.

If you live in the state of New Mexico and have failed to file taxes and the Internal Revenue Service is threatening to seize your property or bank accounts, call us now and our New Mexico Tax Attorneys may be able to help you settle your back tax debt obligations.

The Internal Revenue Service has accepted thousands of Offer in Compromise reduced tax settlement offers which has allowed New Mexico taxpayers relief from their stressful tax debt. Failure to pay taxes can mean huge future payments for penalties and interest. Don’t get blindsided, call a New Mexico Tax Lawyer for help.

The Internal Revenue Service (IRS) is an aggressive debt collector and if you owe back taxes and they have not contacted you, they will. Our New Mexico Tax Attorneys have experience with dealing with the IRS and can help you protect your pay check, home, bank account and other assets from seizure or levies by determining if you meet the qualifications to qualify for Offer in Compromise. If you do, your tax lawyer can gather your tax information and help you prepare your Offer in Compromise application and submit it to the Internal Revenue Service.

Offer in Compromise for Debt Settlement in New Mexico

Offer in Compromise is a program offered by the Internal Revenue Service to help New Mexico tax payers settle their tax debt obligations by paying a fraction of the amount they owe. Offer in Compromise is offered in New Mexico as well as all other states. The goal of Offer in Compromise is to help Mexico taxpayers get current on their tax debt obligations so they will be able to pay their future taxes.

The Internal Revenue Service will accept approximately 20% of the Offer in Compromise applications they receive each year. A New Mexico Tax Attorney can help you submit the appropriate documentation and increase your chances that the Internal Revenue Service will approve your Offer in Compromise application.

Qualifying for Offer in Compromise in New Mexico

• Doubt as to Liability – New Mexico residents may qualify for Offer in Compromise if there is a doubt to the amount of tax liability they owe the Internal Revenue Service. Unfortunately, this argument is rarely proven and is generally only used if the taxpayer has lost on appeal, litigation or if the time has passed to appeal an assessment.
• Doubt as to Collectibility- New Mexico residents must prove that the IRS is unlikely to collect the full amount of tax liability the taxpayer owes.
• Effective Tax Administration- Under Effective Tax Administration the New Mexico residents is not disputing the tax liability or the collectability, but instead, argues that collection of the tax debt would “create an economic hardship which is unfair and inequitable”. All New Mexico taxpayers can use this option, but it is primarily used if you are disabled, elderly or have other extenuating circumstances.

Benefits of Offer in Compromise

1. Offer in Compromise will temporarily halt collection efforts by the Internal Revenue Service while your Offer in Compromise application is under review by the IRS.
2. Offer in Compromise will allow the tax payer to pay less than the original tax amount owed.
3. Offer in Compromise can stop tax liens against property once the tax debt is paid.
4. Offer in Compromise may allow a New Mexico taxpayer to avoid filing bankruptcy.
5. Offer in Compromise may allow a New Mexico resident a fresh financial start with out the fear of the IRS tax collectors harassing them for unpaid tax debt.

Contacting a New Mexico Tax Attorney

The Internal Revenue Service has powers to collect federal tax debt using a variety of aggressive methods including: levies of bank accounts, applying federal tax liens against your property and wage garnishments.  If you are unable to pay your federal tax bill in full or if you are behind in tax payments, it is important to take immediate action and not wait for the Internal Revenue Service to contact you. A New Mexico Tax Attorney can help find the best tax settlement option you.

Offer in Compromise Filing Information:

If you reside in the following states:

Alaska, Alabama, Arizona, California, Colorado, Hawaii, Idaho, Kentucky, Louisiana, Mississippi, Montana, Nevada, New Mexico, Oregon, Tennessee, Texas, Utah, Washington, Wisconsin or Wyoming,

AND

And you are a wage earner, retiree, or a self-employed individual without employees, Form 656 and necessary attachments are sent to:

Memphis Internal Revenue Service Center COIC Unit

PO Box 30803, AMC

Memphis, TN 38130-0803

If you are OTHER than a wage earner, retiree, or a self-employed individual without employees, Form 656 and necessary attachments are sent to:

Memphis Internal Revenue Service Center COIC Unit
PO Box 30804, AMC
Memphis, TN 38130-0804

Offer in Compromise (OIC) is a tax settlement option used by the Internal Revenue Service (IRS) to settle federal tax debt for less than the full amount owed. The IRS has been given the authority by the federal government to accept or reject Offer in Compromise offers. The Internal Revenue Service will accept an offer if they believe collection of the tax debt is unlikely, the amount owed is in question, or it will save the federal government money by not declaring the debt currently not collectible or delay payment with an extended installment agreement.

Approximately 80% of Offer in Compromises are initially denied.  More offers will be accepted through the negotiation or OIC appeal’s process. The IRS does not have to accept a Minnesota taxpayer’s OIC offer and if the IRS chooses to refuse the offer, Minnesota taxpayers do not have a legal right to sue the IRS.

Penalties and interest will continue to accrue until an Offer in Compromise is accepted.

Offer in Compromise can be complicated, time consuming and expensive. If the Internal Revenue Service decides not to accept a Minnesota taxpayers OIC offer, the IRS will have detailed information to continue their aggressive collection actions. Any Minnesota taxpayer who needs more information about Offer in Compromise should contact a tax professional for help. IRS tax settlement options will vary and Offer in Compromise may not be the best choice for all Minnesota taxpayers who owe IRS tax debt.

Qualifying for Offer in Compromise in Minnesota

Minnesota taxpayers will have to meet the following requirements to qualify for an Offer in Compromise:

Doubt as to Collectibility – An Offer in Compromise may be accepted if the IRS believes they will not be able to collect IRS tax debt from the Minnesota taxpayer.

Doubt as to Liability- If there is doubt about the amount of tax liability which has been assessed to the Minnesota taxpayer the Internal Revenue Service may accept an Offer in Compromise. This condition is not frequently met.

Effective Tax Administration- There may be some Minnesota taxpayers who can not pay their outstanding federal tax debt with out creating an economic hardship which would be inequitable or unfair. If the IRS agrees, they may accept the Offer in Compromise. This condition is most frequently accepted for the elderly and handicapped.

Rejection of Offer in Compromise in Minnesota

The Internal Revenue Service grants approximately 25% of the initial OIC offers, but they may be willing to negotiate further to find an agreeable OIC offer. If the offer is denied however, the IRS is required to send written notification to the Minnesota taxpayer to identify the reasons the offer was rejected. If the IRS claims the offer is too low, they should provide information on the amount of offer they would consider reasonable. The Internal Revenue Service must provide information about all OIC offers to Minnesota taxpayers under the Freedom of Information Act.

Minnesota taxpayers who are appealing an Offer in Compromise denial must make their appeal with in 30 days from the date of the Offer in Compromise denial notice. Minnesota taxpayers will only need to resubmit their IRS OIC forms a second time if there has been a drastic change in their financial status or if the Offer in Compromise deadline has passed.

Minnesota taxpayers who are considering Offer in Compromise may want to contact a tax professional for help in the OIC application or OIC appeals process.

Appealing an Offer in Compromise in Minnesota

Minnesota taxpayers who wish to negotiate their Offer in Compromise denial, may informally contact the IRS administrator who reviewed the first OIC offer. The Internal Revenue Service will on many occasions be willing to work with the taxpayer to negotiate a settlement offer which is agreeable to the government and the taxpayer. If the informal OIC appeals process does not provide an acceptable offer, Minnesota taxpayers may choose to file a more formal Offer in Compromise appeal. All OIC appeals must be made in writing to the Internal Revenue Service with in 30 days from the date of the OIC denial letter.

Completing an Offer in Compromise

Minnesota residents who hope to complete an Offer in Compromise must do the following:

• Submit a series of OIC forms and documents to the Internal Revenue Service. Financial documentation may include: pay stubs, bank records, and vehicle information.
• Minnesota taxpayers will have to file all Internal Revenue Service tax returns on or before the federal tax deadline for the next 5 years
• All self-employed Minnesota workers will have to file estimated tax returns and make estimated tax payments each quarter
• Minnesota taxpayers must pay all Internal Revenue Service tax payments (excluding the amount outlined in the OIC) for the next 5 years
• Minnesota taxpayers must agree to pay the amount outlined in the Offer in Compromise
• Minnesota taxpayers must agree to let the Internal Revenue Service keep all IRS tax refunds and apply them toward their federal tax debt prior to submitting their Offer in Compromise
• Minnesota taxpayers must agree that the Internal Revenue Service can apply any tax refund to IRS back taxes for the calendar year that the Offer in Compromise is approved

Minnesota taxpayers who do not meet all of the terms in the OIC contract may have their contract revoked. The IRS also may decide to charge the taxpayer for the full amount of the federal tax debt owed.

Offer in Compromise Forms

1. IRS Form 656- Offer in Compromise. IRS Form 656 provides financial information about the Minnesota taxpayer’s finances and will help the IRS determine if the taxpayer is able 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 Minnesota taxpayer’s ability to meet their tax debt obligations to the Internal Revenue Service.
3. IRS Form 443-B- Collection Information Statement for Businesses. Form 433-B will give the IRS more financial information about the Minnesota taxpayer’s business. Minnesota residents are only required to complete and send this tax form to the IRS if they are including their business tax debt in their Offer in Compromise.
4. IRS Form 656-A- Income Certification for Offer in Compromise Application Fee and Payment. This form is required for any Minnesota taxpayer who is requesting the Offer in Compromise fee waiver.

Minnesota Tax Professionals

Minnesota taxpayers have a wide variety of options available to settle back taxes. Not all tax settlement options will be appropriate for all Minnesota taxpayers. Contact a tax professional such as a certified tax accountant, enrolled tax agent or tax attorney to identify what plan may be best.