IRS - Offer in Compromise - How to

1. If you have assets worth more than your debt to the IRS, forget it.
If you have sufficient equity in your primary home, this too could cause
your efforts to be denied.

2. If you have a potentially high income, or the possibility of having
increased income, in the coming years, the IRS will take this into consideration.

3. When the IRS responds with “you did not fill the forms out correctly”
bite your tongue, and adhere to their request, within 30 days. If they deny the request because “the forms were not filled out correctly” - make the necessary corrections and re-file.

4. Read the Form 656 very carefully.  Review Form 656 B for how to complete the OIC package.  F o l l o w....t h e....I n s t r u c t i o n s.

5.* Complete the Form 433-A if an individual, or the 433-B if you are in business, and attach to the Form 656.

6. Be honest about your income and your assets. It is a crime to lie to the IRS.

7. Know, that you could be audited, when the IRS starts to review your tax file.

8.* Remember that the cable bill and private school are NOT qualified expenses, when determining your monthly income and expenses on Form 433-A / 433-B. You will need a copy of every detail of your financial life: Bank statements, debts, titles, deeds, life insurance policies, income, investments, etc.

9.* If you owe less than $25,000 you can qualify for a payment plan up to 60 months.

10.  Be sure to read, and re-read, the formula, on how to calculate the figurers for your OIC. (20% of proposed settlement amount, $150 non-refundable fee to IRS, etc.)

11.* You must file all past due returns, before the IRS will consider your Offer in compromise (OIC)

12.* Make your Explanation of Circumstances, in Form 656, easy to read.

Warning: In an effort to reduce your net worth, transferring assets, out of your name into a family member’s name is NOT a good idea. Consult with an attorney.

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