It is often said there are two things in life we can’t escape – death, and taxes. While on one hand death seems to be an acceptable (and somewhat expected) end to a possibly exciting life, taxes, on the other, usually leave us confused and frustrated, often scared and in a total state of panic. Jokes aside (who’s joking?), not everything is as dramatic as it seems at first glance. The IRS offers solutions which are all a matter of careful planning and getting familiar with the conditions.
In this article, we’ll talk about the essential elements of the OIC to help you handle your finances.
Most of us are relatively confused as to what an offer in compromise means and whether we’re eligible at all. According to the IRS, an offer in compromise allows you to settle your tax debt for less than the full amount you owe. An OIC is your tax reduction request to the IRS. By sending this request, you are asking for your tax bill to be significantly reduced to the federal government.
An OIC can be very helpful if you find that your current turnover doesn’t cover your taxes and that by paying it, you’ll find yourself in a dead-end financial situation. In essence, you negotiate a new tax amount with the IRS that’ll make it possible for you to continue to run your business.
Although the qualifications are pretty strict, you may qualify if:
While an OIC can be the best solution for a struggling company, there are also some downsides to the deal. Here are a few pros and cons of this tax remedy to your unresolved IRS debt.
The entire process can be nerve-wracking and end up costing you more than your tax obligation altogether. Plus, there are a lot of elements of the process that can turn against you in the long run. If you need to get more information on the matter and get advised by professionals.