OFFER IN
COMPROMISE PROCESS
This
discussion will explain the IRS administrative process
that occurs after you submit an Offer to Compromise.
In general the process begins by testing for
processability. The offer is then evaluated to
assure that it is complete and a financial analysis
ensues to determine your eligibility and the
amount you must offer and the process culminates with
an acceptance, rejection or a counter offer.
PROCESSABILITY
There are
three conditions that must be met for an offer to be deemed
processable failure to comply with any one condition
will result in rejection, a refunded application fee
and any payments made will be applied to your tax
liability. The conditions include the following:
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All
back and current, payroll, excise, partnership,
limited liability or closely held S Corporation
returns must be filed and all current year
estimated tax payments and obligations must be
current. In the event, that you have an active business
you must
have timely deposited, filed and paid employment taxes
for the two (2) proceeding quarters prior to
submitting an offer and you must be current with federal
tax deposits for the quarter in which the offer is
submitted.
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You
have not have filed a bankruptcy petition, and
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You
must have included the application fee and either the lump sum down payment
or first installment of a periodic payment plan. If
you meet the poverty standards both the
application fee and any initial payment requirements will
be waived.
After the
offer is deemed processable your application fee and
any payments made become non-refundable and are applied to your tax
liability in the event that your offer is accepted as
processable but later
rejected. In addition, the collection process
will generally cease and liens will issue.
EVALUATION
An
evaluation ensues after your offer is accepted as
processable. This evaluation tests to assure
that all forms and form elements are complete and that
all documentation is attached. If any items are missing the errors
are perfected by document or information request.
Failure to comply within a reasonable
time will result in rejection.
FINANCIAL
ANALYSIS
This phase
of the offer in compromise process will analyze your
financial and personal circumstances by verifying
asset equities, income and expenses to determine
eligibility, reasonable collection potential (RCP) and
payment terms.
During this
process consideration is given to your overall general
situation and such factors as your age, health, number
of dependents, marital status, education and
occupational experiences.
The
decision to accept or reject doubt as to
collectibility offers generally is dependent on
whether the amount offered adequately reflects reasonable
collection potential.
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