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IRS Offer In Compromise Formula That You Must Understand

IRS SETTLEMENT - IRS OFFER IN COMPROMISE PROGRAM

The IRS has a strict financial formula it uses for the amount number of personal expenses is allows.

If a financially struggling taxpayer is going to submit an Offer in Compromise (OIC), it is essential that you completely understand the computations the IRS uses in analyzing your Offer in Compromise (OIC).

The most common type of IRS settlement is the Offer in Compromise that is the "doubt as to collectability" offer. In analyzing this type of Offer in Compromise (OIC), the IRS determines how much they would be able to collect from the taxpayer by both voluntary and involuntary means generally over a five year period. What this basically means is that in considering an IRS settlement offer, the IRS decides if they would be able to collect the full amount of tax from a person by just about any method or if it would be better to accept a lower amount through an Offer in Compromise.

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WHAT INFORMATION WILL THE IRS CONSIDER?

The IRS considers the value of a person’s assets less any debt owing on the asset. The IRS will allow some leeway in discounting the value of assets.

Next, the IRS decide on how much could be collected from the individual if they were on a monthly installment agreement. The IRS will then take this monthly payment amount and multiply it by a factor of 48 or 60 months depending on the time period that is agreed on for full payment of the offer.

The final part of the equation involves adding the net value of the person’s assets to the monthly payment plan amount. For an Offer in Compromise to be approved, the individual would need to offer the IRS a greater amount than the sum of those two figures.

HAVE AN EXPERIENCED IRS TAX ATTORNEY DO YOUR OFFER IN COMPROMISE.

IF YOU HAVE NEVER DONE AN OFFER IN COMPROMISE, THE IRS IS NOT GOING TO ASSIST YOU.

A simple example of an Offer in Compromise will, hopefully, make this easier to understand. Frank and Jenny owe the IRS $200,000. The value of their assets less any debts owed to them is $75,000. The IRS has determined that they could make monthly payments of $600 on an installment agreement. In order to get an Offer in Compromise approved, they would have to make an offer exceeding $103,800. This amount is computed by multiplying the $600 per month times 48 = $28,800 and adding the $75,000 of net assets.

IF YOU HAVE ONLY YOUR MONTHLY INCOME AND NO ASSETS, YOU WOULD BE FOOLISH NOT TO SETTLE WITH THE IRS.

In computing a taxpayer’s monthly installment agreement amount, the IRS has strict guidelines it uses for the amount number of personal expenses is allows. Because of this, it often times takes some creative strategies for a taxpayer to get an Offer in Compromise approved.

The example above has been over simplified, but with a little bit of review, it is quite possible to adjust your finances enough to get your Offer in Compromise accepted.

If you would like to gain an unfair advantage over the IRS and discover some awesome Offer in Compromise (OIC) strategies regarding an Offer in Compromise:

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FLAT FEE TAX SERVICE, INC. IRS TAX HELP PHONE: 1-800-589-3078

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