Benjamin Franklin famously was once quoted as having said there are only two certain aspects of life, “death and taxes.” And for millions of Americans, affording their tax bill has become an increasingly large burden to bear. To provide some assistance to these taxpayers, the federal government can authorize a reduction in the amount owed. This reduction in taxes takes place in the form of an Offer in Compromise.
Offer in Compromise
An Offer in Compromise or OIC is a way for the Internal Revenue Service, or IRS is to allow a taxpayer to pay less than what they owe on taxes. An offer is typically made to someone when doubt exists about that person’s ability to pay the total tax amount in full.
Prior to making an offer, the IRS will usually assess the person’s entire financial status. And usually, if the person is unable to pay the full amount through a variety of payment options, such as with an installment agreement or selling off assets, an OIC agreement can often occur.
Making payments to the IRS
If you or someone you know has or will have an OIC income tax offer, there are some items you may wish to consider. A primary component of the OIC is that the taxpayer will pay less than they owe to the government. However, you can choose to make a one-time full payment, or you can select an installment agreement.
No matter which option you select, you should consider how each will impact your financial future. In some cases, learning more about income tax law can help you with your case. Income tax attorneys generally understand the many nuances of this type of law and may help you feel more comfortable making a decision about an OIC.
An Offer in Compromise can be a great solution to resolving your outstanding tax debt. Before signing an agreement, learning more about this area of law through your own research and an attorney can help you reach the best outcome for your situation.