- Mon - Fri: 9:00AM - 5:00PM
Offer in Compromise (OIC) tax preparation is a specialized service provided by tax professionals, such as tax attorneys or enrolled agents, to help taxpayers negotiate with tax authorities, such as the Internal Revenue Service (IRS), to settle their tax debts for less than the full amount owed. OIC tax preparation involves a thorough analysis of the taxpayer’s financial situation, determination of eligibility for an OIC, and careful preparation of the required documentation to support the offer.
The first step in OIC tax preparation is conducting a comprehensive financial analysis of the taxpayer’s income, expenses, assets, and liabilities. This analysis helps determine the taxpayer’s ability to pay the full tax debt and establishes the basis for the OIC offer. The tax professional will review the taxpayer’s financial statements, bank statements, pay stubs, tax returns, and other relevant documents to gather the necessary information.
Once the financial analysis is completed, the tax professional will determine the taxpayer’s eligibility for an OIC. Not all taxpayers are eligible for an OIC, as it is a stringent program with strict eligibility requirements. The tax professional will assess the taxpayer’s financial situation, including factors such as income, expenses, equity in assets, and future earning potential, to determine if the taxpayer meets the IRS criteria for an OIC. If the taxpayer is eligible, the tax professional will proceed with the preparation of the OIC offer.
The preparation of the OIC offer involves meticulous documentation and calculations. The tax professional will prepare the necessary forms, such as Form 656, Offer in Compromise, and Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-B, Collection Information Statement for Businesses, depending on the taxpayer’s situation. These forms require detailed financial information, including income, expenses, assets, and liabilities, and must be completed accurately to support the OIC offer.
In addition to the forms, the tax professional will prepare a comprehensive letter of explanation that accompanies the OIC offer. This letter provides a detailed explanation of the taxpayer’s financial situation, the reasons for the offer, and any special circumstances that may impact the IRS’s decision. The letter of explanation is a critical component of the OIC package, as it provides the taxpayer’s narrative and helps justify the OIC offer.
Once the OIC package is completed, the tax professional will submit it to the IRS on behalf of the taxpayer. The IRS will review the OIC offer and may request additional documentation or clarification. The tax professional will work closely with the IRS to address any inquiries and negotiate the best possible outcome for the taxpayer. This may involve further discussions, appeals, or negotiations to reach a favorable resolution.
OIC tax preparation requires in-depth knowledge of tax laws, regulations, and IRS procedures, as well as strong negotiation and advocacy skills. Tax professionals with experience in OIC tax preparation can provide invaluable assistance to taxpayers seeking to settle their tax debts through this program. By carefully analyzing the taxpayer’s financial situation, determining eligibility, preparing the required documentation, and navigating the IRS process, OIC tax preparation can help taxpayers achieve a successful settlement and resolve their tax liabilities in an efficient and favorable manner.
The duties of a tax professional in OIC tax preparation can vary depending on the specific circumstances of the taxpayer’s case, but generally include.
Every year, millions of American taxpayers suffer the consequences of not hiring a professional for tax resolution.
