Every year, the Internal Revenue Service (IRS) approves countless offers of commitment to taxpayers regarding their late tax payments. Basically, the IRS reduces the tax-liability debt owed by a taxpayer in exchange for a global settlement. If your OCI takes one year to be considered and is rejected, the IRS still has four years to collect against you. Right now, there are more than 20 million individual and business taxpayers who owe the IRS, but few get an OCI.
If you can't settle the agreement within five months, the IRS will grant you 24-month payment terms. Taxpayers who can pay what they owe through an installment agreement or other means do not qualify for a transaction offer (OIC) and the IRS says it will not accept a commitment offer unless the amount offered is equal to or greater than the potential for reasonable collection. For step-by-step instructions and all the necessary blank forms, including requirements for people with low incomes, read the IRS brochure on pledge offers. The small offer that the IRS accepts will depend on your financial situation, and you'll need to disclose it in great detail on Form 433-A (for salaried workers and the self-employed) or 433-B (for companies).
Every year, the IRS accepts thousands of offers of commitment to taxpayers regarding their late tax payments. A “compromise offer” is a little-known but remarkably effective way for thousands of people with problems with the IRS to routinely eliminate tens of thousands of dollars in tax debts. In other words, the IRS offers you a discount for paying them the settlement of the offer sooner rather than later. The Offer in Compromise program is a powerful tax relief program designed by the IRS to reduce the tax liability of struggling business owners or individual taxpayers.
The IRS calls these limitations financial collection rules, sometimes also referred to as allowable living expenses. They include IRS financial analysis rules, which include what assets are included and excluded and what are the average expenses allowed for the taxpayer. If you don't qualify for a transaction offer or if your offer is rejected, seek debt solutions, such as liquidation and consolidation. But keep in mind that the IRS disagrees with taxpayer assessments and calculations 60% of the time and rejects those offers.