You’ve examined your options for resolving your debt and believe that an offer in compromise could be a viable solution. Unfortunately, several roadblocks stand in the way. Chief among these: a high rejection rate, as evidenced by the whopping 34,000 offers the IRS turned down in 2018.
Thorough preparation can improve your chances of landing an accepted OIC. Keep the following in mind as you embark on this difficult, but potentially life-changing journey:
Take a Look at Basic Eligibility Standards
First, you should determine whether you meet key standards for OIC eligibility. Before you begin your application, you should have already:
- Filed all tax returns.
- Made necessary estimated quarterly tax payments for this year.
- Completed federal tax deposits if you own a business with employees.
Gather Supporting Documents for IRS Form 433-A
In addition to the eligibility standards referenced above, the IRS will take a close look at your income, assets, and lifestyle to determine whether a generous offer is justified. Details gathered during this investigation should be supported by documentation referenced in IRS Form 433-A. Be prepared to provide insight into:
- The amount of money held in check, savings, and money market accounts.
- Cash value of life insurance policies.
- Details about real property such as houses or condos.
- Descriptions and market value of tangible assets such as artwork or jewelry.
- Business asset information if you are currently self-employed.
- Documents detailing current sources of income.
- Health insurance information, including premiums and out-of-pocket expenses.
This might seem like a lot, but it only scratches the surface. You’ll also need to make reasonable estimates regarding your monthly spending for food, clothing, personal care products, and public transportation fees. Seek as much documentation as possible to verify every detail included on your application.
At the Highland Tax Group, we’re happy to advocate on your behalf as you deal with the IRS. We can assist you with every aspect of the offer in compromise process. Contact us today to get started.