When a Federal or state tax liability is present, there are many options in which you can resolve your account with either taxing agency. One option is known as an Offer in Compromise (OIC). An Offer in Compromise is a settlement agreement between the taxing authority and the taxpayer to pay the tax liability back. The settlement amount is a sum based on your total monthly income against your monthly living expenses. It will also take into consideration any equity in assets you may own. This can relate to property, retirement accounts, whole life insurance policies or your vehicles. An Offer in Compromise can be remitted for individuals and businesses that owe a tax liability. The OIC program has become more prevalent in current days because the amount offered is largely lower than the full amount owed.
If you aren’t sure of how to submit an Offer in Compromise, a team of tax experts such as Omni Tax Help can assist you in compiling an Offer in Compromise. Directions can also be found in any Offer in Compromise Booklet. These booklets are located on the Internal Revenue Service’s website. Exact forms needed for each state can be found on the Department of Revenues website. First and foremost, all required tax returns must be filed on your account. Neither federal nor state taxing agents will consider an Offer in Compromise if there are missing tax returns. If you are unable to pay the full amount of tax liability that is due, you will have to prove what your ability to pay is. A list of supporting documentation that must be sent can be found on www.IRS.gov or the states website as well as steps on how to present your set of facts and circumstances. If your financial state shows you are in a financial hardship, you can safely assume that your offer in compromise will be a low amount. A financial hardship is shown when your income is taken into thought and compared against your expenses. The result must be that you have no leftover money at the end of the month. When a full financial analysis is done, and it shows you have the ability to make monthly payments you will have to either increase your total OIC amount or request to be placed on an Installment Agreement instead. An Installment agreement is also known as a payment plan. The payment plan amount is decided by the leftover monthly amount figured on your financial study.
An Offer in Compromise can be offered to resolve your federal or state tax liability. Mostly, when a federal tax liability is present there are also hurdles with the state and local taxing authorities that result in an extra tax liability. It would be helpful to do research on the state’s Department of Revenue rules and procedures in which you reside and work in. Not all states within the United States have the option of an Offer in Compromise program. Now, there are only thirty-eight states that have an Offer in Compromise as a tax resolution option. They are as follows: Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma ,Oregon, Pennsylvania, Rhode Island, Tennessee, Utah, Virginia, Washington, West Virginia, Wisconsin. Tax experts or taxpayers themself should do complete research for the state and local rules about the OIC program. This is to ensure that the data you are gathering is part of the required documents that must be sent. Each state is going to follow its own set of rules. The rest of the states: Alabama, Alaska, Florida, Idaho, Montana, New Mexico, North Dakota, South Carolina, South Dakota, Texas, Vermont, and Wyoming do not have an Offer in Compromise as a resolution option.