The IRS Office in Compromise (OIC) program provides individuals with substantial debt to the federal government a mechanism to reduce their tax liabilities and enjoy a clean slate. However, the OIC process can be confusing and highly technical. Avoid making these five mistakes as you pursue financial freedom.
MISTAKE #1: Failing to report assets or hiding cash to try to qualify.
The OIC program is designed to help only people who are really struggling – who are backed into a financial corner. The basic idea of the compromise is that the IRS would rather get something than nothing. However, as tempting as it might be to underreport your assets in order to qualify, don’t! First of all, it’s unethical. Second of all, if the IRS finds out, your offer will immediately be denied – in other words, you can sink a case that might be won by ethical means. Finally, if you lie or misreport on Form 433-A, the government can charge you with perjury, which can lead to a felony criminal conviction!
MISTAKE #2: Making mistakes or omissions on complex forms, like Form 433-A and Form 656.
Small clerical errors you make on these forms can delay your application and potentially cause an otherwise winning case to be rejected. These forms require a lot of information to be entered precisely and accurately. When in doubt, get help.
MISTAKE #3: Failing to understand or abide by eligibility requirements.
Have you failed to meet your quarterly tax deposits if you’re a business owner? Have you neglected to file all your annual returns? Has the Department of Justice (DOJ) investigated you for a tax crime? Don’t bother applying for an OIC if you’re guaranteed not to get it. You’ll only waste money and generate false hope at the expense of getting more accurate help with your financial issues.
MISTAKE #4: Failing to substantiate your claims.
A standard federal tax return might be processed automatically. Not so, an OIC. A human being – the Offer in Compromise Examiner – will take a close look at your income, assets and other claims. Make sure you have documentation to back up what you say.
MISTAKE #5: Applying for an OIC by yourself if you don’t clearly understand what to do and how to do it.
Remember: you’re making a legal claim when you apply for an OIC, and the consequences could be profound both for your finances and your peace of mind. If you’re at all confused about any aspects of the process, get help from a qualified tax professional. Please reach out to the team at Highland Tax Group for a thorough analysis of your eligibility and OIC strategy. Call 720-398-6088 for help now.