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Negotiate a debt settlement through an Offer in Compromise. An Offer in Compromise (OIC) is an IRS program that allows you the taxpayer to settle your liabilities for less than the full amount owed. You show the IRS that it is financially impossible for you to pay off all your tax debt within the statute period.
The IRS does have the authority to write off all or some of your tax debt and settle with you for less than you owe. This is called an offer in compromise, or OIC.
A taxpayer must file all required tax returns first before the IRS can consider a settlement offer. When applying for a settlement offer, taxpayers may need to make an initial payment. The IRS will apply submitted payments to reduce taxes owed. The IRS has an Offer in Compromise Pre-qualified tool on IRS.gov.
If you can't pay the taxes you owe the government, you have only two options: negotiate a payment plan or ask the IRS to allow you to pay a reduced amount through an offer in compromise (OIC). They don't like extended payment plans because people default on them.
If you are keeping score, that's an average settlement of $6,629. Now, that does not mean that you can settle with the IRS for that amount, or that there is a 40% chance your offer will be accepted. The IRS uses a very specific formula in determining the settlement value of an OIC and whether to accept or reject it.
The IRS Fresh Start Program is a program that is designed to allow taxpayers to pay off substantial tax debts affordably over the course of six years. Each month, taxpayers make payments that are based on their current income and the value of their liquid assets.
The average amount the IRS settles for in an offer in compromise is $6,629.
If you can't pay the taxes you owe the government, you have only two options: negotiate a payment plan or ask the IRS to allow you to pay a reduced amount through an offer in compromise (OIC). They don't like extended payment plans because people default on them.
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