If you are familiar with the IRS rules and regulations, you must have known about the offer in compromise. It is an important aspect for people who have pending tax debts. Using the offer in compromise facility, we can settle our debts once and for all with the Internal Revenue System. Experts believe there are several benefits of using the OIC method, and we will learn about them in detail here.
Naturally, you do not feel comfortable around these tax terms due to a lack of knowledge and information. Once you get a California tax agency, they will assess the complexity of your situation and find the best possible ways to help you. Keep reading to learn everything you need to know and more.
Basics of Offer in Compromise
You will only know whether to accept the offer in compromise once you learn the basics. If you ask ordinary people, they will tell you that they don’t know much about these IRS offers. An offer in compromise is an agreement between you and the IRS officials, which records the amount you agree to pay to settle your pending taxes.
Usually, the amount is less than the debt amount. When the IRS feels that it is not possible to get back the full amount from a person, they use this method to have at least a portion of it.
Who Can Apply for This Option?
Although an offer in compromise is a popularly known facility, not everyone can get it. There are strict eligibility criteria regarding OIC. Here are some of the important aspects that you need to know about-
- Franchise Tax Board is the authority that decides whether a person would get an OIC facility or not.
- If you really can’t pay back the whole tax amount, you can only apply for it. Without proper reason, it is not even possible to file.
- Once you apply for an offer in compromise and submit related documents, the FTB will thoroughly check your application and take the final decision.
If you are going to apply for it, it is important to gather related information and then go for the move.
How to Prepare for OIC?
We have already discussed the criteria and rules regarding Offers in compromise. The following tips will help you prepare for the OIC.
- Every entity, be it a person or an organization, needs to fill out form no 4905 to file for an Offer in Compromise.
- In this form, you need to fill in information about your income, expenditure, and other financial information.
- There is some added financial information you might have to submit to the IRS. Make sure to hire a Ventura tax attorney for help.
The Complete Procedure Involved
Once you apply, the FTB will check whether you really can’t pay back the amount or are just bluffing. Reasonable collection potential is an estimation the FTB will create and match it with your submitted information.
The whole process is quite complex and will take time. If you have already hired an expert, then he will do all the important job on your behalf.
