Offer in Compromise Part 3
Now that you know what an Offer In Compromise can do for you, let’s look at some of the reasons you might decide this option is not for you. Note that all prior year returns must be filed before you can submit an Offer.
- The fact that you have applied for an OIC is a matter of public record for one year.
- The IRS is likely to audit your recent tax returns during the process
- The process can take up to 2 years.
- The IRS will take any tax refunds you might have in the year the OIC is accepted.
- This process requires Full Financial Disclosure.
- If you default on this agreement, the IRS reinstates all penalties and interest.
- A down payment of 20% of the amount of the Offer is required with the application and is retained even if not approved.(This amount is then applied to your tax liability)
- The process extends the statute on your liability during the review plus 30 days.
- You MUST file and pay all your taxes for 5 years.
Keep in mind, if the IRS determines that with your assets and future earnings potential, you will be able to pay off the liability before the statute expires, if will reject the OIC. If you do decide this process is the best option for you, a tax consultant can help you through the process.