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Houston IRS Offer in Compromise

A taxpayer assisted by a tax professional shaking hands with an IRS agent in an office.

One of the most common and best shots at overcoming crushing tax burden from the IRS is to seek an offer in compromise agreement. This means that you agree to pay a lesser amount, which the IRS agrees will settle your accounts. They are often willing to settle for less than what is owed because something is better than nothing.

Further, the IRS knows that the longer it takes to resolve your debt, the more money they actually lose in time spent, so settling may in the outing may allow them to save money and balance everything. The problem is that the IRS also puts stringent requirements on the Offer in Compromise process, including steep fees and down-payments for the application.

This process also carries the risk of rejection, which can set you back further while you decide how to move forward with an appeal. All of this means it is a very good idea to work with an experienced tax expert from Instant Tax Solutions. Our agents are highly knowledgeable and have helped many folks just like you. We know how to submit OIC forms that get approved, and we have other options for tax relief to offer.

If you are ready to seek help with your options for tax relief, and education on what the IRS wants from you, we are ready to be your partner and ally. There is no cost or obligation for your initial consultation and it is entirely confidential. Get in touch with us at (888) 921-3781 or through our online form and get started today.

Experienced Houston Offer in Compromise Help

Making an offer in compromise can be a solution to your tax woes, but it is also not a simple matter. The IRS will consider many different factors when they look at your application, and if any of these do not match up in their eyes, they will deny your application. You will certainly need to justify your application and demonstrate why you cannot pay the full tax amount.

This means that you need to collect detailed records regarding your financial background, why the current tax burden is unpayable, and what your plan of action is to move forward. You must also be able to pay the fees, downpayment, or installments while you wait for the IRS to make their decision.

Instant Tax Solutions has over a decade of experience dealing with the IRS, negotiating with revenue officers, and handling many different forms of tax relief and abatement. We can’t guarantee success, but we can give you a better chance by making use of our knowledge and a detailed review of your financials.

When we offer you the options available, you may even find that another form of relief is better for you, such as an installment agreement or an amended tax return. We will help you put together your records to provide documentation of your financial hardship, and we will represent your taxpayer rights to the IRS. This will reduce the chances of an out-of-hand rejection.

We can also help with appeals, if necessary. With us in your corner, you will be better prepared and will have a determined, expert ally on your path to financial solvency.

What Is an IRS Offer in Compromise?

When you owe a creditor money, you can sometimes reach out to them and offer a lower amount than they say you owe, which they agree to accept as payment in full. Often, this is a strategy used to pay back overdue credit cards, which you can never pay down normally.

An offer in compromise through the IRS is the same thing. When the agency contacts you and says that you owe a large sum of money in back taxes, you can sometimes get that money reduced by making an offer to pay a lesser, but still reasonable sum. The IRS offer program offers a path forward to get out of your debt with the IRS through a compromise that is in everyone’s best interests.

Am I Eligible for Houston OIC Agreement?

The first step to eligibility for a Houston OIC agreement is to ensure you file all of your tax returns. Thus, if the IRS has approached you for a tax burden due to non-filing, you will need to file an amended return for the tax year or years in question. This amended return in and of itself may sometimes be a solution to your problems as you can sometimes apply credits and deductions that the IRS did not. Instant Tax Solutions can help you with this process.

Second, you must have received at least one tax bill for the debt against which you are making an offer. Finally, if you normally make estimated tax payments, you must be up to date on those for the current year as well as making all federal tax deposits for the past three quarters (including the current one) if you have employees.

From there, you must make sure that you make a reasonable offer to the IRS. Submitting the offer also does not automatically mean it will be accepted. The IRS must then evaluate your offer to determine if an agreement is warranted.

Several factors will render you ineligible for an OIC agreement.

Bankruptcy Proceedings

If you or a business you own is currently going through open bankruptcy proceedings, you cannot apply for an offer in compromise. This is because resolving your tax debts usually occurs as part of the bankruptcy proceedings.

Open Audits and Innocent Spouse Claims

Likewise, if you currently have open tax audits or are dealing with issues related to innocent spouse claims, you cannot apply for an OIC. Resolve these issues first, and if you still need an offer, you can proceed once they are no longer open.

Houston Doubt as to Collectability

Doubt as to Collectability is one of the three major reasons that the IRS may accept an offer in compromise. What this means is that if there is a situation where your assets and income are less than the full amount of your liability as assessed by the agency. This means if you liquidate every asset you have, you could still not pay your taxes, or that you do not meet the guidelines for an installment plan.

Doubt as to Liability

Doubt as to liability is another reason for an OIC. This criterion is met if there is a real and legitimate dispute as to whether you actually owe the tax debt they claim. For this reason, help from Instant Tax Solutions is essential. We can review your financial documents and records and determine if mistakes were made that reduce your tax burden. We can then gather documentation of the dispute and submit it to back up the claim.

Effective Tax Administration

Finally, effective tax administration means that you could pay the full amount, but gathering the funds to do so would result in undue economic hardship. Alternately, if you can demonstrate that the collection would be inequitable and unfair due to exceptional circumstances such as personal tragedies, medical issues, or the like, you may be eligible for this approach. Instant Tax Solutions can help you determine which rationale is best for your situation.

The Offer in Compromise Process

The first step in the OIC process is to submit your application, which consists of Form 433-A for individuals or Form 433-B for businesses, as well as all required documentation of your rationale. You must then submit Form 656(s) as needed for your situation.

A $205 application fee is required, as is an initial payment for each Form 656 you submit. You choose either a lump sum settlement that you pay all at once, or a periodic installment agreement. This will determine the amount of your initial payment.

After this, the IRS evaluates your offer, applying your initial payment(s) to the existing liability. They may then perform any of the following:

  • File a Notice of Federal Tax Lien
  • Suspend other collection activities
  • Extend the legal assessment and collections period

While they review, you must make all required payments in good faith per your offer, but you do not have to continue paying existing installment agreements. If the IRS fails to make a determination within two years, not including appeal periods, your offer is automatically accepted.

If the IRS Accepts Your Offer

If the IRS accepts your offer, you must continue to meet all the offer terms as outlined in your Form 656. Any lies will not be released until the terms are complete.

If the IRS Rejects Your Offer

If the IRS rejects your offer you have 30 days to appeal the rejection. While the IRS offers assistance in this process, it is always best to seek help from an expert, experienced tax relief service. Instant Tax Solutions is ready to fight for you.

Get Help With Your Offer in Compromise Today

If you feel tired and beaten down by the burden of excess tax obligations, Instant Tax Solutions is here to help. We can help you to get ahead of the game once again, whether it’s through an offer in compromise, seeking abatement of penalties and interests, releasing liens, or other forms of resolving your tax balances.

We have one goal, and that is to help you get your finances back in order so you can enjoy a bright future whether you are an individual or a small business. Getting approved can be a challenge, but we are here to help you rise to it. Get started with a free review of your tax records and a confidential evaluation today. Just call us at (888) 921-3781 or contact us online to schedule a meeting.

Doubt as to Collectibility

To request an Offer in Compromise agreement based on doubt of collectibility means you doubt your ability to ever pay the IRS the full amount of tax owed. This is usually a tough conclusion to negotiate on your own, so we recommend talking with an expert before attempting anything.

What Determines Doubt as to Collectability?

Before requesting an OIC agreement for this reason, taxpayers must not be able to pay their tax debt by:

The IRS Process of Determining Eligibility

There are two basic components used by the IRS to determine what a taxpayer can or cannot pay:

  • Value of assets owned, and
  • Potential for future payment

Asset Evaluation – The IRS will want to know the current value of all assets if sold today.  These assets include property, vehicles, boats, home furnishings, investments, retirement savings, and any other possessions of value.

When reviewing your request to close your case as Currently Not Collectible (CNC), Offer in Compromise investigators determine the value of your assets, your future earning ability, and any assets available to you that are beyond the reach of the government.

They will usually claim the asset is worth more than a taxpayer will.  Asset values can be questioned and adjusted based on circumstances, and usually a fair compromise can be reached.

Future Payment –   The IRS will want to determine how much a taxpayer could pay each month on a five-year installment agreement.  They will consider many factors such as age, health, work status, and education to predict the probability of future income increases.

Important Currently Not Collectible Factors

  • The government will continue to enforce collections on individuals even if they cannot pay.  It is the taxpayer’s responsibility to provide proof of his current financial status.
  • Temporarily classifying a case as CNC stops current collection action.  However, the tax liability is not eliminated and will continue to increase due to penalties and interest.
  • The IRS may continue to monitor your financial status annually to determine if your finances have improved.  Collection efforts can resume at any time.
  • The IRS has the authority to grant a CNC status based on a Collection Information Statement (CIS) that is no more than a year old.  An experienced tax attorney can ensure the accuracy of this information.
  • Even if a taxpayer’s CIS lists income or assets that can be levied, he can still qualify for a CNC status.  He must be able to show that the collection of the delinquent taxes would impair his ability to pay for necessary living expenses.
  • Each case is unique.  Special circumstances are considered in all cases, such as health, age, education, etc.
  • If the taxpayer can afford $25 monthly, the IRS will require the taxpayer to accept an installment agreement before his case is placed in CNC.
  • If the IRS believes future collection efforts will be successful, or if the tax debt is $5,000 or more, a lien will be filed before an account is deemed CNC.

Effective Tax Administration (Hardship Offers)

The Effective Tax Administration (ETA) Offer is the most recent addition to the Offer in Compromise help package, allowing the taxpayer to claim hardship.

Severe hardship”, simply stated, means the taxpayer acknowledges the validity of the tax debt and can pay the amount owed in full.  However, he or his family will suffer severe hardship as a result.  Qualifying for tax relief under hardship claims is usually the most difficult.  It is recommended to have a professional tax attorney to assist with filing Form 433-A and supplying the detailed information required.

Beginning the ETA Process

Your tax professional can help you develop a very detailed statement regarding the exceptional circumstances surrounding your case.  These circumstances must prove that paying your tax debt in full would create an ecomic hardship, or would be unfair.  An experienced tax professional knows how to approach the IRS and give you the best chance for acceptance.

Prior to considering an ETA Offer, the IRS must determine that:

  • You do not qualify for an OIC agreement based on collectability
  • You do not qualify for an OIC agreement based on questioned liability
  • You do not qualify for an OIC agreement due to a lengthy history of tax problems

Three Situations that May Support an Economic Hardship Claim

  1. A medical condition, disability or illness exists that limits the taxpayer’s ability to make a living.  Further, all the taxpayer’s financial resources will be required to pay for medical care.
  2. Paying the tax liabilities in full would leave the taxpayer unable to pay basic living expenses (food, housing, utilities, clothing, mecial, etc.)
  3. Although a taxpayer may have sufficient value in assets to pay off the tax liability, these assets cannot be borrowed against.  Also, the IRS cannot seize these particular assets to pay off the taxes.

Who is Most Likely to Qualify for ETA Offers?

Those who can most often successfully utilize the ETA Offers are:

  • People with life-threatening illnesses
  • People having family members with life-threatening illnesses
  • People living on limited fixed-income
  • Business owners, not at fault for an underlying tax liability, who would have to close their business if they had to pay



Related Tax Problems

Un-Edited Client Reviews

Linda C.
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The experience was a painless one with no hassles of hoops to jump. I had a debt of $16,000.00 and ended up paying $1,700.00. They handled everything from start to end with a very positive resolution. The entire staff was very helpful and courteous through the process with no gimmicks. Keep on with the GREAT work.

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I had ten years of taxes I hadn’t filed. I was really nervous and didn’t know what to do. I checked the IRS website for tips on selecting a company. Instant Tax Solutions had a good rating and made me feel comfortable working with them. A burden has been lifted from my shoulders. Thank you Instant Tax Solutions!

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