What is the difference between an irs financial hardship and an offer in compromise (oic)?

It can be a legitimate option if you can't pay. Frequently Asked Questions About Commitment Offers · Appeal Your Declined Offer · Transcript. If the IRS accepts your offer, but you don't file or pay all your taxes on time for five years after the acceptance, the IRS will notify you that your offer is in arrears and can cancel it and you'll have to pay all of your debt (not the reduced amount of the offer). Generally, the statutory period within which the IRS can engage in collection activities is suspended during the period when the OIC is pending, for 30 days immediately after the IRS rejects an OIC, and for the period when the IRS Independent Office of Appeals is considering a timely appealed denial.

If you agree to owe the tax and decide to submit an offer, you'll need to provide the IRS with full financial information. When the IRS terminates an OIC, the agreement is no longer in effect and, in that case, the IRS can collect the amounts originally due (minus the payments made), plus interest and penalties. The IRS will keep any refunds, including interest, that may be due in connection with tax returns filed up to the date the IRS accepts the offer. While the IRS generally suspends other collection activities (such as taxing your salary or bank account) while your offer is pending, the IRS can file a federal tax lien notice to protect its right of retention on any property you own and to notify other creditors of those interests.

We can offer you help if your tax problem is causing financial difficulties, if you have tried and failed to resolve your problem with the IRS, or if you think an IRS system, process, or procedure just isn't working as it should. The IRS will keep any refunds, including interest, for tax periods that extend until the date the IRS accepts your offer. However, the IRS will send you a notice 30 days from the date of the notification to respond to the IRS request that you reconsider your decision to return the offer. It can be a legitimate option if you can't pay all of your tax obligations or if doing so creates financial difficulties for you.

In addition, the IRS can return your offer to you if you don't respect the application fee or the payment of the offer, or if you don't provide the information the IRS requested. If you can't pay your tax debt in full or if paying it in full will cause financial difficulties, an offer of commitment (OIC) may be an option. If your offer is accepted, the IRS will keep any refund it owes you for tax returns filed until the date the IRS accepts your offer. The letter will explain why the IRS rejected the offer and will provide detailed instructions on how the taxpayer can appeal the decision to the IRS Independent Office of Appeals.

Keep a careful record of the dates. If the IRS does not refuse, return, or you withdraw your offer within two years of the date the IRS receives it, the offer will be considered accepted.

Dorothy Skeete
Dorothy Skeete

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