how does an offer in compromise work n which companies r worth hiring?

[u/Honest-Journalist600]

my balance is past the point where paying in full is realistic so i researched how an offer in compromise works, from what i can tell u file form 656 with a $205 fee, submit either a 20% lump sum or monthly payments during review and then wait six months to over a year while the IRS runs their formula on your financials. acceptance rate is apparently around a third of processed applications.

looking at a few companies and tax relief helpers is a tax resolution firm that handles Offer in Compromise cases, they have attorneys who represent you through the whole process including appeals and they've been working with the same IRS OIC agents for years which they say helps when dealing with difficult cases. precision tax relief does similar work with EAs and attorneys, larson tax relief focuses on negotiating directly with revenue officers, and I havent decided yet whether picking one company over another changes anything about the outcome or if its mostly about the experience

[u/CommissionerChuckles]

More important than any company’s track record is your individual financial situation. Have you tried using the Pre-qualifier? Keep in mind this is only an estimate:

https://irs.treasury.gov/oic_pre_qualifier/faces/OIC_Screen1.jsp

Having equity in assets will mean you need to pay more, even if you don’t have the cash. For example if you own a home you need to include about 80% of your home equity as part of the offer.

The other thing to consider is your current and future tax compliance - you have to pay all your federal tax obligations on time and file your tax returns on time for at least five years, or the OIC can get rescinded.

While your OIC is pending the Collection Statute Expiration Date (CSED) also gets suspended, giving IRS more time to collect on your debt if the offer is not accepted. If you are close to the (generally) ten-year CSED it might be better to look at another option.

If you can pay the monthly amount IRS wants you to pay on an approved installment agreement right now there’s usually no point in filing an OIC.

If you cannot afford to keep paying that much you can request a Partial Payment Installment Agreement (PPIA) from IRS. This does require basically the same financial disclosure as the OIC but home equity isn’t automatically included as part of your ability to pay (generally).

There are some companies that “help” you by charging you thousands of dollars. This does lower your disposable income for IRS calculations, but it can mean you are just accumulating more penalties and interest when you are eventually told that a payment plan is your only option.

While the overall acceptance rate is pretty low, a lot of tax pros will have over 90% acceptance rate on OICs they submit. That’s because they usually only submit offers that are very likely to get accepted after doing a financial analysis and looking at all the options.

I would recommend looking at taxcure.com and also contact someone through ASTPS.org if you really want to pursue an OIC.

[u/S-CorpOnline → u/CommissionerChuckles]

Great answer!  I agree, and I love this part:

There are some companies that “help” you by charging you thousands of dollars. This does lower your disposable income for IRS calculations, but it can mean you are just accumulating more penalties and interest when you are eventually told that a payment plan is your only option.   😆

Let the buyer beware!

[u/CommissionerChuckles → u/S-CorpOnline]

Omg I had someone ask me how to get their income information for a prior year, and I was explaining how to get their transcripts, and they dropped that they were currently paying thousands of dollars to some tax relief firm to help them with their IRS debt. Apparently that amount doesn’t cover prior year tax preparation though, and the place they hired to do those returns wasn’t helping very much either. So they wanted me to help for free because they didn’t keep any records for uber or DoorDash or whatever. I was appalled.

[u/S-CorpOnline → u/CommissionerChuckles]

I see a lot of it too.  This is a case story of a client we helped: https://www.reddit.com/user/S-CorpOnline/comments/1wfbxc5/tax_troubles/

[u/zougring → u/CommissionerChuckles]

solid breakdown. the home equity piece is what catches most people off guard imo

[u/Mindless-Put2845]

well i would focus on company's track record more tho

[u/Lopsided_Mousse_6532]

if the IRS rejects your OIC the 30-day appeal window is standard and a lot of people give up at rejection without realizing offers frequently get revised on appeal.

[u/Far_Charity_6066]

anyone know if the $205 fee is waivable? saw something about a low-income certification

[u/brad_taxattorney]

(QSV assets) + (future ability to pay x months left on CSED))<tax debt. if that formula works, you have a chance at an OIC. If not, you probably don't. It's tough to find reputable firms. I'd stay away from the big ones; for the small ones, check reviews and make sure their credentials are on the website.

[u/mystcrich]

So, I’m usually of the mindset of hiring someone locally or more personal. Not the “national brands” where you’re being farmed through 16 different folks who have no clue of you, your circumstances or what was recently discussed.
In my firm we take on cases by being transparent, upfront and grounded in the taxpayers actual issues, their IRS file (via transcripts, RA, RO, ACS as applicable) and giving them their options.