IRS OFFER-IN-COMPROMISE PAYMENT OPTIONS
As part of a properly prepared and fully documented Offer-in-Compromise, the taxpayer can request one of the three basic payment options:
- Lump sum cash offer
- Short term periodic payment offer
- Deferred periodic payment offer
IRS Offer-in-Compromise payment options: The submission of an Offer-in-Compromise payment request of any type requires the filing of Form 656 along with a $150 application fee and an initial, non-refundable payment. The initial payment will vary based upon the amount of the offer and the chosen payment amount. The IRS provides an Offer-in-Compromise pre-qualifier tool to allow taxpayers to confirm their eligibility and prepare a preliminary Offer-in-Compromise proposal.
Lump Sum Payment Offer-in-Compromise Agreements
All lump sum payments under an accepted Offer-in-Compromise requires payment within five periodic installments or less, starting upon written notice of acceptance of the offer. All lump sum installment offers must be accompanied by a non-refundable payment of 20 percent of the offer amount. The basic form of Offer-in-Compromise Settlement Agreements are:
- Payments in less than five months. This offer must include the amount of present realizable assets based on asset valuation guidelines and total realized monthly excess collectible income based on allowable expenses over a period of 12 months.
- Payments in more than five months but within 24 months. This offer must consider realizable asset valuation plus collectible excess income over 24 months.
- Payments in more than five months and longer than 24 months. This offer must include realizable asset liquidation values plus excess collectible income monthly until the running of the applicable statute of limitations.
Choosing the proper criteria for submitting an acceptable Offer-in-Compromise lump sum settlement of any duration requires a complete evaluation of your particular tax situation. At the Law Offices of Neil Crane, LLC, we take the time to examine your specific individual circumstances. We’ve developed a wealth of knowledge through decades of experience with taxpayer budgets and proven knowledge of IRS calculations of total asset valuations and realizable monthly collectible income.
Short Term Periodic Offer-in-Compromise Payment Offers
This payment option requests that the IRS take taxpayer payments within 24-month installments from the date of submission of the short-term offer request. All payments made are non-refundable. Given the average time for a submitted Offer to receive a positive or negative response is 10-14 months, making payments from the date of submitting the taxpayer’s Installment Offer-in-Compromise is an important and risky process. The taxpayer could be half-way into installment payments on the date the Offer is rejected. As with many IRS Offer-in-Compromise payment options, the offer amount must include the value of realizable present assets plus total collectible income over the 24-month collection period. Since regular payments must be made from the date of submission and all through the IRS’s evaluation period, it is essential to properly prepare and evaluate the appropriate offer amount. Remember these payments made under a rejected short-term installment offer are non-refundable.
Failure to make any of the proposed payments will result in return of the offer and loss of the interim payment installments.
Since the IRS is not in any way required to accept an Offer-in-Compromise based on the amount or payment period, it is essential to submit the proper combination of the amount offered and periodic payment terms under your specific circumstances. To maximize your chances for success with the IRS, rely on the assistance of a local tax professional. Don’t be misled by outside promises from unverified companies. Rely only on the advice of a qualified tax relief professional who has carefully examined your full financial picture and any upcoming changes. The stakes are high and there are no shortcuts. Success requires specialized tax knowledge, experience, and hard work.
Deferred Periodic Offer-in-Compromise Payment Offers
This installment payment option requests that the offer amount be paid over the remaining statutory period allowed for collection of the tax debt due. It requires payment of regular installments during the investigation period. All installments are nonrefundable, in the event of rejection of the offer based on the overall payment amount or the time period of the proposed long-term Offer-in-Compromise Agreement. Any failure to submit payments during the IRS investigation period will deem the offer withdrawn.
Put our knowledge and experience to work for you by calling a tax relief attorney at the Law Offices of Neil Crane, LLC at 203-230-2233. You can also contact our offices online. We offer a free initial consultation with all the legal protection of attorney/client privilege. We have office locations in Hamden, Bridgeport, Ridgefield, Waterbury, New Haven and Rocky Hill, Connecticut.
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