Offer in compromise Attorney In Chicago, Illinois

Individuals and businesses facing IRS tax debt in Chicago, IL, have the option to explore an Offer in Compromise, potentially settling their tax obligations for a reduced amount. This approach can be beneficial in stopping collection activities and providing relief from certain financial burdens imposed by the IRS. If considering an OIC, it's advisable to seek professional advice from our tax attorneys to ensure eligibility and navigate the application process effectively.

An Offer in Compromise (OIC) with the IRS is a legal agreement between a taxpayer and the Internal Revenue Service that allows the taxpayer to settle their tax debt for less than the total amount owed. The IRS may accept an OIC if it represents the most it can collect from the taxpayer within a reasonable period.

The Three Criteria For An Offer In Compromise Are:

1. Doubt as to Liability (DATL): Doubt as to whether the taxpayer owes the tax debt.
2. Doubt as to Collectibility (DATC): Doubt about the taxpayer's ability to pay the total tax debt.
3. Effective Tax Administration (ETA): Situations in which collecting the total tax debt would create an economic hardship or be unfair and inequitable

Key points about Offers in Compromise include:

Eligibility: To be eligible for an Offer in Compromise, a taxpayer must meet specific criteria. Typically, individuals facing financial hardship, significant doubt as to collectibility, or those who qualify under special circumstances may be considered.

Reasons for Acceptance: The IRS may accept an Offer in Compromise for several reasons, including doubt as to liability (questioning the amount owed), doubt as to collectibility (doubting the taxpayer's ability to pay the total amount), and to promote Effective Tax Administration.

Submitting an Offer: Taxpayers interested in submitting an Offer in Compromise must complete the required forms (and provide detailed financial information to support their offer. This includes information on income, expenses, assets, and liabilities.

Offer Amount: The offer amount is based on the taxpayer's ability to pay and is calculated using a formula that considers income, expenses, and asset equity. The IRS generally looks for an offer amount that reflects the taxpayer's reasonable collection potential.

Payment Options: Taxpayers can choose from different payment options for the offer amount, such as a lump sum cash offer, where a one-time payment is made, or a periodic payment offer, where payments are made in installments.

Application Fee and Payment: There is an application fee for submitting an Offer in Compromise, and taxpayers must also make an initial payment along with their offer. However, low-income individuals may qualify for a reduced fee.

Review and Decision: The IRS reviews the submitted offer to ensure that it meets all requirements. If accepted, the taxpayer must adhere to the terms of the offer, which may include compliance with tax obligations for a specified period.

Consequences of Rejection: If the IRS rejects an Offer in Compromise, the taxpayer has the right to appeal the decision. Alternatively, they can explore other options, such as setting up an installment agreement.

Qualification and Acceptance by the IRS: The IRS must accept qualified OICs. Once accepted, the OIC can stop various collection activities, including wage garnishments, tax liens, and bank levies.

Stopping Collection Activities: Once an OIC is accepted, it stops annoying collection activities and provides relief from actions like wage garnishments and other financial levies.

It's important to note that obtaining approval for an Offer in Compromise can be a complex process. To navigate the requirements and increase the likelihood of a successful outcome, it's recommended that you seek the assistance of a qualified tax attorney at Benjamin Legal Services.