You can submit an offer on taxes owed individually and for your business. It starts the process of evaluating your situation, your ability to pay, and the amount you’re offering. Submitting an offer doesn’t guarantee the IRS will accept your offer. Follow the instructions in Form 656B Booklet, Offer in Compromise Booklet , to prepare and file your offer.īefore you decide to submit an Offer in Compromise (offer), you should be aware of several things. Make a list of your income, expenses, assets and any debts owed against those assets. If you agree you owe the tax and you decide to submit an offer, you’ll need to give the IRS complete financial information. There is no application fee for this type of offer, but you must offer more than zero dollars. You should include a written statement explaining in detail why you believe the IRS is in error and attach supporting documentation. If you’ve exhausted other options, and you think an offer is the best action, you can submit Form 656L, Offer in Compromise (Doubt as to Liability). If you made a mistake on your return, filing an amended return may remove the debt. Most options are easier and less time consuming than submitting an offer, so it’s worth seeing if there is anything else you can do to resolve the debt before filing an offer. If the tax you owe is from an audit you didn’t know about or weren’t able to present any information for, you might be able to get an audit reconsideration. If you feel you don’t owe the tax or the amount is incorrect Review the tax debt to make sure you owe it. , if the IRS rejects your offer. For more possible outcomes, see the How will this affect me? section below. You have the right to appeal Conference with a technical Appeals employee to discuss IRS actions to resolve the tax liability. The IRS will apply the non-refundable fee and payments to your tax liability. If the IRS rejects your offer, it won’t return the application fee or any other payments you made with the offer. Any resolution of your debts generally must take place within the context of your bankruptcy proceeding.Īfter the IRS notifies you it has accepted your offer and you pay the reduced amount you’ve agreed to, your entire tax debt is resolved if you fulfill the terms of the offer agreement. proceeding, you’re not eligible to apply for an offer. Insolvency is the inability to pay a debt as it becomes due. NOTE: If you or your business is currently in an open bankruptcy A taxpayer files a petition in bankruptcy court. If you own a business and have employees, you must file all returns and be current on all your federal tax deposits. Periodic Payment Offer : Generally, you’ll make the first payment when you submit the offer and the rest within 24 months, according to the terms of your offer.įor the IRS to accept an offer, you must file all tax returns due and be current with estimated tax payments or withholding.You’ll need to pay the rest in five or fewer payments, within five or fewer months of the date the IRS accepts the offer. Lump Sum Offer : Generally, you’ll be required to pay 20 percent of the total amount you’re offering when you submit the offer.The amount of the first and following payments will depend on the total amount you offer and which payment option you choose. There are two kinds of payment options for an offer - you must select one of them and include payment with your offer.
You can still discuss questions you have about filing an offer by contacting the IRS. Before submitting an application, use the IRS Offer in Compromise Pre-Qualifier Tool to see if you may be eligible to make an offer.First, review all the other options that might be available to you. Some of these will have lower fees and can be easier and faster to obtain.
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