The Internal Revenue Service has the authority from the federal government to collect taxes to fund government activity. Connecticut residents who owe federal tax liability may be able to negotiate with the Internal Revenue Service to settle their federal tax debt for less than the full amount owed.

The Internal Revenue Service offers a variety of debt settlement options for Connecticut taxpayers including Offer In Compromise. Offer In Compromise allows the taxpayer to make an “offer” to the Internal Revenue Service to settle tax debt. Penalties and interest continue to accrue until the offer is accepted and the IRS has sole discretion to decide if they are willing to accept the Offer in Compromise. If the Internal Revenue Service does not accept the offer, they will have detailed financial information which they can use to continue their collection efforts.

Connecticut taxpayers who are considering Offer in Compromise, may want to discuss their financial situation with a tax professional such as a tax accountant, tax attorney or enrolled agent to decide if Offer in Compromise is the best tax settlement option available.

Qualifying for Offer in Compromise in Connecticut

All Connecticut residents Offer in Compromise (OIC) applications will not be accepted. In fact, the IRS accepts approximately 20-25% of the first time offers. More are accepted on appeal. Offer in Compromise can be time consuming and expensive. Offer in Compromise offers will only be accepted if they meet one of the following criteria:

1. Doubt as to Liability-  Connecticut residents may qualify for Offer in Compromise if there is doubt about the amount of IRS tax debt they owe. This condition is not commonly met.
2. Doubt as to Collectibility-  Certain Connecticut residents will have outstanding tax debt which is not in question, but the Internal Revenue Service will decide they can not collect the debt or collection of the debt would cost more than settling with an Offer in Compromise.
3. Effective Tax Administration- If the Internal Revenue Service believes collection of the tax debt will cause “an economic hardship which is inequitable and unfair” they may decide to accept the Offer in Compromise. This is most commonly used for the elderly and disabled.

Rejection of Offer in Compromise in Connecticut

It is not unusual for an Offer in Compromise to be rejected. If the Offer in Compromise is rejected the Internal Revenue Service is obligated to send the taxpayer written notification explaining the reason for the denial and suggest an offer they would consider reasonable. The Internal Revenue Service frequently denies Offer in Compromise offers because they believe the offers are too low. Connecticut taxpayers are allowed to request all OIC information and will have legal access to the information under the Freedom of Information Act.

Tax Professionals can help submit all Offer in Compromise applications and negotiate with the Internal Revenue Service if the offer is denied. All OIC appeals must be made with in thirty days from the date of the denial. New Offer in Compromise forms will only need to be completed if the Connecticut taxpayer’s financial information has drastically changed or if the deadline to appeal the Offer in Compromise has expired.

Appealing an Offer in Compromise in Connecticut

Connecticut taxpayers whose Offer in Compromise application has been denied may be able to re-negotiate the offer with the administrator who made the first decision. If negotiations fail, a more formal OIC appeal process is available. The Internal Revenue Service frequently will engage in negotiations to settle tax debt with the goal of helping the tax payer pay federal liability now and put them in a position to pay all future tax obligations.

Connecticut taxpayers who would like to appeal their Offer in Compromise denial, must make a written appeal to the Internal Revenue Service.  To reduce the chance of a denial all the following tasks must be completed and the following information provided:

1. The Internal Revenue Service will need detailed information about the Connecticut taxpayer’s finances.
2. Connecticut taxpayers will need to file all past tax returns.
3. Self-employed workers must file and make estimated tax payments each quarter.
4. Connecticut taxpayers will need to pay all the tax liability they owe that is not covered under the Offer in Compromise agreement.

The Internal Revenue Service does not have to agree to the OIC appeal. They have sole discretion to accept or deny all OIC applications and Connecticut taxpayers do not have the legal ability to sue the Internal Revenue Service if the Offer in Compromise appeal is denied.

There are a variety of forms that Connecticut taxpayers will have to complete to make the Offer in Compromise:

1. IRS Form 656- Offer in Compromise. Form 656 provides information about the amount of funds Connecticut taxpayers can offer to settle their Internal Revenue Service tax debt.
2. IRS Form 443 A- Collection Information Statement for Wage Earners and Self-Employed Individuals. Connecticut taxpayers will provide information about their current financial statues on this form and the Internal Revenue Service can use the information to determine the taxpayer’s ability to repay their tax debt.
3. IRS Form 443-B- Collection Information Statement for Businesses. Internal Revenue Service uses Form 433-B to collect information about the taxpayer’s business. Tax Form 433-B is required if a Connecticut taxpayer is including their business in their Offer in Compromise.
4. IRS Form 656-A- Income Certification for Offer in Compromise Application Fee and Payment. Connecticut taxpayers can use Form 656-A if they are requesting the Internal Revenue Service to waive the OIC fee.

Connecticut Tax Professionals

The Internal Revenue Service offers a wide variety of tax settlement options for the Connecticut taxpayer. If you live in Connecticut and you are considering an Offer in Compromise, a tax professional can help. Tax professionals can provide the knowledge and expertise needed to you determine if Offer in Compromise is right for you.

The Internal Revenue Service has created a variety of tax settlement options to help Tennessee taxpayers settle federal tax debt at a fraction of the full amount. Offer in Compromise is one of the most common of these programs. The goal of the Offer in Compromise (OIC) is to allow the Tennessee taxpayer to make an “offer” and if the Internal Revenue Service accepts the offer, than the tax liability will be settled if the OIC requirements are met. The IRS has developed the OIC program to help taxpayers settle tax debt and have the ability to meet all of their future tax obligations.

The Internal Revenue Service has been given the legal authority by the United States federal government to collect taxes. Tax payments are used by the federal government to fund their activities. The Internal Revenue Service also has sole authority to accept or decline Offer in Compromise offers. If the IRS does not accept the taxpayer’s offer, the taxpayer does not have any legal authority to sue the Internal Revenue Service.

Until the Internal Revenue Service accepts an OIC offer, penalties and interest will continue to accrue on the outstanding tax debt. In addition, if the offer is declined, the IRS will have detailed financial information from Tennessee taxpayers to continue aggressive collection actions. Currently approximately 25% of first time offers are declined. More may be accepted after all appeals and negotiations are completed. Offer in Compromise is not the best option for everyone. It can be expensive and time consuming. All Tennessee taxpayers who are considering Offer in Compromise may want to seek the advice of a tax professional.

Qualifying for Offer in Compromise in Tennessee

Not all Offer in Compromise offers will be accepted. Tennessee taxpayers who are considering an OIC must meet one of the following criteria:

1. Doubt as to Liability- Tennessee taxpayers who have doubt as to the amount of tax liability they owe may be able qualify for Offer in Compromise. This condition is not frequently met.
2. Doubt as to Collectibility- If the Internal Revenue Service determines a Tennessee taxpayer’s debt is either not collectable or too expensive to collect they may accept an Offer in Compromise. This condition differs from the first condition because the amount of debt is not in question, only the ability of the Internal Revenue Service to collect the debt.
3. Effective Tax Administration- Tennessee taxpayers who are unable to pay federal tax debt because payment might cause “an economic hardship which is inequitable and unfair”, may be able to qualify for Offer in Compromise. This option is used most often for the handicapped and the disabled.

Rejection of Offer in Compromise in Tennessee

The Internal Revenue Service currently denies most Offer in Compromise offers. If an Offer in Compromise offer is denied, the Internal Revenue Service is required to send written notification to the Tennessee Taxpayer which outlines the reason the OIC offer has been denied and if the IRS considered the offer too low, what would be an acceptable offer. All Tennessee taxpayers have the right to view all Offer in Compromise information under the Freedom of Information Act.

Tennessee taxpayers who have been denied must file a formal written appeal to the Internal Revenue service with in 30 days from the date of the denial letter. Tax professionals can help with all stages of Offer in Compromise including the initial offer and the OIC appeals process. New Offer in Compromise forms do not need to be resubmitted unless a taxpayer’s financial situation has substantially changed or if the OIC deadline has expired.

Appealing an Offer in Compromise in Tennessee

Tennessee taxpayers who have been denied can contact the Internal Revenue administrator who first reviewed their Offer in Compromise offer to begin the negotiation process. The Internal Revenue Service will often work with the taxpayer to come to a mutually acceptable agreement. If the IRS administrator will not negotiate, a formal appeal can be made by sending a letter to the Internal Revenue Service with in the thirty-day deadline.

Tennessee taxpayers who hope to qualify for Offer in Compromise must meet the following requirements:

• Voluntarily submit all financial records and necessary documentation to the Internal Revenue Service
• Complete all the necessary Offer in Compromise forms to the Internal Revenue Service
• File all federal tax returns
• File and pay all estimated federal tax payments quarterly  (for taxpayers who are self-employed)
• Pay all federal tax debt except for the amount outlined in the Offer in Compromise

Tennessee taxpayers must also submit the following Offer in Compromise forms:

1. IRS Form 656- Offer in Compromise. IRS Form 656 provides detailed financial information about the financial status of the Tennessee taxpayer to the Internal Revenue Service and documents the ability of the Tennessee taxpayer to repay their federal tax debt.
2. IRS Form 443 A- Collection Information Statement for Wage Earners and Self-Employed Individuals. IRS Form 443-A provides additional financial information about the Tennessee taxpayer to the Internal Revenue Service.
3. IRS Form 443-B- Collection Information Statement for Businesses. Form 433-B provides information to the Internal Revenue Service about a Tennessee taxpayer’s business. Tax Form 433-B is not required if the Tennessee taxpayer is not including their business debt in the Offer in Compromise offer.
4. IRS Form 656-A- Income Certification for Offer in Compromise Application Fee and Payment. This form is only needed if the Tennessee taxpayer is requesting the Offer in Compromise fee be waived.

Tennessee Tax Professionals

Offer in Compromise is only one of several Internal Revenue Service tax settlement options available for Tennessee taxpayers. Offer in Compromise can be expensive and time consuming.  Tax professionals can provide information about the right type of tax settlement plan for each taxpayer based on the taxpayer’s current financial situation.