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OFFERSINCOMPROMISE SETTLING TAX LIABILITIES WITH THE IRS First Run Broadcast: November 28, 2012, Live Replay: February 7, 2013 1:00 p.m. E.T.×12:00 p.m. C.T.×11:00 a.m. M.T.×10:00 a.m. P.T. ×60

How to fill out offersincompromise settling tax liabilities

How to fill out offers in compromise settling tax liabilities:

1. Gather all necessary documentation: Start by collecting all relevant financial documents, such as tax returns, income statements, and bank statements. You will need these to accurately assess your tax liabilities and determine your ability to pay.
2. Determine your eligibility: Before filling out offers in compromise, it is essential to determine if you qualify for this tax settlement option. The IRS provides specific guidelines, including income, asset, and liability requirements. Review these guidelines to ensure you meet the necessary criteria.
3. Complete Form 433-A or Form 433-B: These forms are used to gather your financial information and determine your ability to pay the tax liabilities. Form 433-A is for individuals, while Form 433-B is for businesses. Fill out the appropriate form accurately and thoroughly, providing detailed information about your income, assets, and expenses.
4. Calculate your offer amount: The IRS uses a specific formula to calculate the offer amount based on your monthly disposable income. You will need to complete Form 656, Offer in Compromise, to propose your settlement amount. Additionally, you may need to include a payment for your offer amount or set up a payment plan.
5. Submit your offer in compromise package: Once you have completed all the necessary forms and calculated your offer amount, you need to submit your offer in compromise package to the IRS. Include all required forms, supporting documentation, and the necessary fee or payment arrangement.
6. Wait for IRS review: After submitting your offer in compromise package, the IRS will review your proposal and determine if it is acceptable. This review process can take several months, so be patient and ensure you remain in compliance with any ongoing tax obligations during this time.

Who needs offers in compromise settling tax liabilities?

1. Individuals with significant tax debt: Offers in compromise can be a viable option for individuals who have accumulated substantial tax debt and are unable to pay it in full. It provides a way to settle the debt for less than the total amount owed.
2. Businesses facing financial hardship: If a business is struggling financially and unable to meet its tax obligations, offers in compromise can help alleviate the burden and provide an opportunity for settlement.
3. Taxpayers with limited income and assets: Offers in compromise are often available to taxpayers with limited income and assets, as they are assessed based on the individual's ability to pay.

In conclusion, filling out offers in compromise involves gathering necessary documentation, determining eligibility, completing the appropriate forms, calculating the offer amount, and submitting the package to the IRS. Offers in compromise can be beneficial for individuals and businesses facing tax liabilities they cannot afford to pay in full.

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What is offers in compromise settling tax liabilities?

An offer in compromise is an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer's tax liabilities for less than the full amount owed.

Who is required to file offers in compromise settling tax liabilities?

Taxpayers who are unable to pay their full tax liabilities or who have a legitimate reason for not being able to pay may file an offer in compromise.

How to fill out offers in compromise settling tax liabilities?

Taxpayers can fill out Form 656, Offer in Compromise, along with supporting documentation and payment for the application fee.

What is the purpose of offers in compromise settling tax liabilities?

The purpose of an offer in compromise is to allow taxpayers who are unable to pay their full tax liabilities to settle their debts with the IRS and avoid further collection actions.

What information must be reported on offers in compromise settling tax liabilities?

Taxpayers must report their income, expenses, assets, and debts on Form 433-A (OIC) or Form 433-B (OIC), along with any supporting documentation.