What Are the Different Types of Offers in Compromise?
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작성자 Genevieve Secre… 작성일 24-09-02 05:01 조회 22 댓글 0본문
Introduction
The IRS Offer in Compromise (OIC) program provides a way for taxpayers to settle their tax debt for less than the full amount owed. However, not all offers are the same, as there are different types designed to address specific circumstances. Here, I’ll explain the various types of Offers in Compromise based on my personal experience and what I’ve learned from reliable sources.
Doubt as to Collectibility
The most common type of Offer in Compromise is based on doubt as to collectibility. This applies when the IRS believes that you cannot pay the full amount of your tax liability within the remaining time allowed by law. Here’s what I had to do:
• Financial Disclosure: I provided detailed financial information, including income, expenses, and asset equity.
• Supporting Documents: I included bank statements, pay stubs, and documentation of my monthly expenses to demonstrate my inability to pay the full amount.
•
Doubt as to Liability
The second type is doubt as to liability. This is used when there is a legitimate dispute about the existence or amount of the tax debt. If you believe the IRS has incorrectly assessed your tax liability, this type of offer might be suitable. My steps included:
• Form 656-L: Completing this specific form to indicate doubt as to liability.
• Supporting Evidence: Providing documentation that supported my claim that the tax amount was incorrect, such as past tax returns, legal documents, or any relevant correspondence with the IRS.
Effective Tax Administration (ETA)
The third type is based on Effective Tax Administration (ETA). This is applicable when there is no doubt that the tax is legally owed and that the full amount could be collected, but requiring payment in full would cause economic hardship or be unfair and inequitable due to exceptional circumstances. My journey involved:
• Explaining Hardship: Demonstrating how paying the full amount would create severe financial hardship.
• Exceptional Circumstances: Providing documentation of circumstances like medical conditions or other unique situations that justified why I couldn’t pay the full amount without suffering undue hardship.
Public Policy and Equity Considerations
A less common but important aspect of Offers in Compromise involves public policy and equity considerations. In such cases, the offer is considered if there are compelling public policy or equity grounds, even if the taxpayer can technically pay the tax debt. This is typically rare and often involves:
• Public Policy Justification: Demonstrating how accepting the offer aligns with public policy goals.
• Equity Grounds: Showing how full payment would be inequitable, considering the taxpayer's specific situation.
Conclusion
Understanding the different types of Offers in Compromise is crucial for determining which one best fits your situation. Whether you’re claiming doubt as to collectibility, doubt as to liability, or seeking relief based on effective tax administration, being prepared with the necessary documentation and understanding the specific requirements is key. My experience taught me that thorough preparation and a clear understanding of the type of offer I was applying for made the process smoother and more manageable.
FAQs
What is the most common type of offer in compromise Honolulu in Compromise?
The most common type is based on doubt as to collectibility, where the taxpayer demonstrates an inability to pay the full tax debt.
What form do I need for an Offer in Compromise based on doubt as to liability?
You will need to complete Form 656-L, Offer in Compromise (Doubt as to Liability).
Can I apply for an OIC if I can pay the full amount but it would cause hardship?
Yes, you can apply under the effective tax administration criteria if paying the full amount would cause severe economic hardship.
How do I prove my tax liability is incorrect for an OIC?
You need to provide supporting documentation such as past tax returns, legal documents, or any correspondence with the IRS that proves your claim.
What are public policy and equity considerations in an OIC?
These considerations are rare and involve demonstrating that accepting the offer aligns with public policy goals and that full payment would be inequitable due to the taxpayer’s unique situation.
The IRS Offer in Compromise (OIC) program provides a way for taxpayers to settle their tax debt for less than the full amount owed. However, not all offers are the same, as there are different types designed to address specific circumstances. Here, I’ll explain the various types of Offers in Compromise based on my personal experience and what I’ve learned from reliable sources.
Doubt as to Collectibility
The most common type of Offer in Compromise is based on doubt as to collectibility. This applies when the IRS believes that you cannot pay the full amount of your tax liability within the remaining time allowed by law. Here’s what I had to do:
• Financial Disclosure: I provided detailed financial information, including income, expenses, and asset equity.
• Supporting Documents: I included bank statements, pay stubs, and documentation of my monthly expenses to demonstrate my inability to pay the full amount.
•
Doubt as to Liability
The second type is doubt as to liability. This is used when there is a legitimate dispute about the existence or amount of the tax debt. If you believe the IRS has incorrectly assessed your tax liability, this type of offer might be suitable. My steps included:
• Form 656-L: Completing this specific form to indicate doubt as to liability.
• Supporting Evidence: Providing documentation that supported my claim that the tax amount was incorrect, such as past tax returns, legal documents, or any relevant correspondence with the IRS.
Effective Tax Administration (ETA)
The third type is based on Effective Tax Administration (ETA). This is applicable when there is no doubt that the tax is legally owed and that the full amount could be collected, but requiring payment in full would cause economic hardship or be unfair and inequitable due to exceptional circumstances. My journey involved:
• Explaining Hardship: Demonstrating how paying the full amount would create severe financial hardship.
• Exceptional Circumstances: Providing documentation of circumstances like medical conditions or other unique situations that justified why I couldn’t pay the full amount without suffering undue hardship.
Public Policy and Equity Considerations
A less common but important aspect of Offers in Compromise involves public policy and equity considerations. In such cases, the offer is considered if there are compelling public policy or equity grounds, even if the taxpayer can technically pay the tax debt. This is typically rare and often involves:
• Public Policy Justification: Demonstrating how accepting the offer aligns with public policy goals.
• Equity Grounds: Showing how full payment would be inequitable, considering the taxpayer's specific situation.
Conclusion
Understanding the different types of Offers in Compromise is crucial for determining which one best fits your situation. Whether you’re claiming doubt as to collectibility, doubt as to liability, or seeking relief based on effective tax administration, being prepared with the necessary documentation and understanding the specific requirements is key. My experience taught me that thorough preparation and a clear understanding of the type of offer I was applying for made the process smoother and more manageable.
FAQs
What is the most common type of offer in compromise Honolulu in Compromise?
The most common type is based on doubt as to collectibility, where the taxpayer demonstrates an inability to pay the full tax debt.
What form do I need for an Offer in Compromise based on doubt as to liability?
You will need to complete Form 656-L, Offer in Compromise (Doubt as to Liability).
Can I apply for an OIC if I can pay the full amount but it would cause hardship?
Yes, you can apply under the effective tax administration criteria if paying the full amount would cause severe economic hardship.
How do I prove my tax liability is incorrect for an OIC?
You need to provide supporting documentation such as past tax returns, legal documents, or any correspondence with the IRS that proves your claim.
What are public policy and equity considerations in an OIC?
These considerations are rare and involve demonstrating that accepting the offer aligns with public policy goals and that full payment would be inequitable due to the taxpayer’s unique situation.
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