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Tax Relief Counsel:
Offer in Compromise Attorney
Get financial relief with the help of an offer-in-compromise attorney from Tax Relief Counsel. We can negotiate with the IRS to settle your tax debt for less. Your fresh start begins here!
Trusted Offer-in-Compromise Tax Attorney in Washington, D.C
The veteran legal professionals at Tax Relief Counsel are your dedicated partners in debt relief, with ample experience skillfully negotiating IRS offer-in-compromise agreements.
The IRS collected over $98.4 billion in unpaid assessments in FY 2022 alone. We understand the urgency of finding actionable solutions in light of statistics like these, especially considering that the IRS assessed nearly $23.8 billion in additional taxes for late filings and collected over $2.3 billion with delinquent returns in the same year.
Our seasoned offer-in-compromise tax attorney is committed to helping individuals and businesses secure financial freedom.
When you choose Tax Relief Counsel, you gain access to a legal team with unmatched practical knowledge of tax law, who will work to make your tax debt a thing of the past.
What Is an Offer in Compromise?
An offer in compromise (OIC) is a legal agreement between a taxpayer and the Internal Revenue Service (IRS) that allows the taxpayer to settle their tax debt for less than the full amount owed. This option is available when paying the full tax debt would result in financial hardship for the taxpayer or when there’s a legitimate dispute regarding the amount owed.
The IRS considers several factors when evaluating an OIC, including the taxpayer’s:
- Ability to pay
- Income and expenses
- Asset equity
- Overall financial situation
To qualify, taxpayers must meet specific eligibility criteria and provide accurate financial documentation.
Typically, the IRS will accept an offer in compromise when the proposed amount is the most they can realistically collect over a given period, usually about five years.
If accepted, an OIC allows the taxpayer to resolve their tax debt and achieve a fresh start while avoiding more severe collection actions. However, the OIC process can be complex, and it’s advisable that you seek the assistance of a qualified tax attorney to navigate it successfully.
Am I Eligible for an Offer in Compromise?
The IRS offers a potential solution for taxpayers burdened by unmanageable tax debts through its Offer in Compromise program. To qualify, you must meet the following criteria:
- Tax Debt: You must have a valid tax debt you’re unable to pay in full; this includes the tax principal plus any penalties and interest accrued.
- Tax Returns: You must have filed all required federal tax returns for the tax years in question — the IRS will not consider an OIC if you have unfiled tax returns.
- Estimated Tax Liability: You must provide an accurate estimate of your current tax liability for the year in which you submit the OIC, including income, deductions, and credits.
- Required Payments: While your OIC is under consideration, you must make any required estimated tax payments and stay current with your federal tax obligations.
- No Open Bankruptcy: If you have an open bankruptcy proceeding, you’re generally ineligible for an OIC.
- Not in an Audit: If you’re currently undergoing an IRS audit, your OIC won’t be considered until the audit is complete.
Meeting these eligibility criteria is essential to have your OIC application considered by the IRS. Consult a tax professional or offer-in-compromise attorney to ensure that you meet all requirements and give yourself the best chance of success.
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Types of Offers in Compromise
There are three main types of offers in compromise that taxpayers can consider when seeking to settle their tax debts with the IRS.
1. Doubt as to Collectibility
This type of OIC (often abbreviated as “DATC”) is designed for individuals or businesses who are unable to pay both their taxes and necessary living expenses.
To qualify, individuals must file Form 656, along with Form 433-A (OIC) (for individuals) or Form 433-B (OIC) (for businesses) to provide evidence of financial hardship. The IRS will evaluate your financial situation and may accept offers that come close to your reasonable collection potential. Payment options include a lump-sum payment or structured periodic payments.
2. Doubt as to Liability
Doubt as to liability might be the grounds for your OIC filing when you’re unsure whether you actually owe the taxes or disagree on the amount, regardless of your ability to pay. To apply, complete and submit Form 656-L. You may be required to explore other tax resolution programs, like innocent spouse relief, before considering this option.
The focus here is on the legitimacy of the tax debt, not your ability to pay it. As such, payment arrangements aren’t the central concern.
3. Effective Tax Administration
Effective tax administration OIC is intended for situations where enforcing tax law would create undue hardship or be inequitable, regardless of your income level. Similar paperwork as DATC is involved, including Form 656. Additionally, you must provide a compelling explanation of why collecting the tax would be unjust.
This option is primarily meant for individuals facing extraordinary hardships, such as serious illness. Payment arrangements are typically established based on the individual’s specific circumstances.
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Paying the Down Payment in an Offer in Compromise
When pursuing an offer in compromise to resolve tax debt, you’ll need to make an initial payment along with the $205 application fee. There are two payment options:
- Lump Sum: Pay 20% upfront and your negotiated balance in five or fewer installments over five months post-approval.
- Periodic Payments: Propose six to 24 monthly installments for the entire offer balance, including the first installment with your OIC submission.
These payments are non-refundable but go toward reducing your tax liability. They’re the essential first step in relieving intractable tax debt.
What Happens If the OIC Is Accepted?
If the IRS accepts your offer in compromise, you can settle your tax debt for less than the full amount you owe. The agency’s collection efforts will cease, offering you immediate financial relief, a fresh start, and peace of mind.
What Happens If the OIC Is Rejected?
A rejected OIC means your proposed settlement terms weren’t accepted. In this situation, your tax debt will remain, and the IRS will resume collections. You can appeal, explore alternative payment options, or seek professional guidance to address the situation.
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Why You Need an OIC Tax Attorney
Retaining the services of an offer-in-compromise tax attorney is critical, especially considering that not all OICs are accepted. In fiscal year 2022, the IRS accepted only 13,165 offers out of 36,022 proposed.
Here are a few reasons why skilled legal representation is so important:
Thorough Assessment
We’ll analyze your financial situation to determine whether an OIC is your best option.
Strategic Proposal
If you meet the criteria for an OIC, our team will craft a compelling proposal, maximizing your chances of acceptance in a competitive process.Skillful Negotiation
Our skilled negotiators will represent you before the IRS, further enhancing the likelihood of a favorable settlement.Precise Documentation
We’ll assist in preparing and submitting all required documentation accurately, which is a crucial factor in the success of an OIC.
Appeals Representation
In case of rejection, we’ll advocate for you during the appeals process, working to reverse the decision.
Legal Protection
With us, you’ll have legal protection and attorney-client privilege, ensuring confidentiality and safeguarding your rights.
Given the complex nature of OICs and the relatively low rate of acceptance, our team’s experience is indispensable in increasing your chances of achieving meaningful tax relief.
Why Choose
Tax Relief Counsel?
Selecting Tax Relief Counsel to oversee your offer in compromise offers numerous advantages.
Trustworthy Experience
Ramy Shabana, founder and lead attorney at Tax Relief Counsel, is an experienced and award-winning tax attorney who has successfully managed numerous offer-in-compromise proposals.
Better Chance of Acceptance
We have a proven track record of crafting compelling OIC proposals. Our legal abilities will increase your odds of acceptance.
Skilled Negotiation
We’ll handle all communication with the IRS on your behalf, striving for favorable settlement terms and ensuring that you’re treated fairly.
Thorough Documentation
Our team will make sure all required documentation is complete and accurate to give your proposal the best chance of being approved.
FAQs About Offers in Compromise
Can I negotiate an offer in compromise on my own?
Yes, you can attempt to negotiate an offer in compromise with the IRS on your own. The IRS provides detailed instructions and forms for individuals who want to submit an OIC without professional assistance.
That said, it’s important to understand that the process can be complicated, and the IRS has stringent acceptance criteria. The acceptance rate for self-submitted OICs is relatively low compared to those prepared with the help of qualified tax professionals.
A tax attorney can assess your specific circumstances, determine the best approach, and elevate your chances of acceptance through several means. While it’s possible to go it alone, seeking professional guidance is generally the wise decision.
How long does the process take?
While it’s difficult to say with certainty how long it will take for the IRS to make a decision about your OIC, we’ve provided a rough timeline of the key steps:
- Initial Consultation: When you contact a tax lawyer for an initial consultation, they’ll provide an overview of the expected timeframe for your unique situation.
- One to Two Weeks: During this period, you’ll gather the required financial and tax documents while your tax attorney starts preparing Form 656 and other application documents.
- Six Months: After submitting your offer, the IRS will take an estimated six months to review it; however, this duration can vary depending on your situation and the agency’s backlog at the time of your application.
- 30 Days After Rejection: If the IRS rejects your offer, you’ll have 30 days to appeal; during this period, the IRS won’t initiate enforced collection actions, allowing you to explore other options if you choose not to appeal.
- Five Months After Acceptance: If your offer is accepted and it involves making a lump-sum payment, you’ll need to do so within five months of acceptance.
- 24 Months After Acceptance: For OICs with payment plans, you must make payments over a 24-month period following acceptance.
- Five Years After Acceptance: Most OIC agreements stipulate that you must remain compliant with tax payment and filing obligations for five years after obtaining an OIC; if you fail to do so, the IRS may revoke the agreement and demand full payment.
It’s important to note that these are general guidelines — your situation may differ.
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Ready to get a handle on your tax debt? Contact Tax Relief Counsel today to set up a free consultation with our seasoned tax lawyer.
(202) 630-4095