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.
