Offer in Compromise – Advantages & Disadvantages – the right choice for you?

What are the Advantages and Cons of an OIC?

One solution you might wish to consider to help you resolve your IRS problems is to submit an Offer in Compromise or OIC.

Pros

• If you have tax debt, the OIC allows you to make a deal with the IRS to pay what you can afford and the balance is forgiven. You'll have zero back taxes to pay and you can start over.
• Your stress level should be reduced somewhat as property and wages can't be seized during the review period.
• Your credit rating will improve when the OIC is accepted and you've paid your part of the deal because your public record will include a Notice of Release of Federal Tax Lien within thirty days.

Cons

• Your OIC will be public record for a year. This means that anyone can get access to your information, including your finances. This may bring future problems. Your information remains confidential, however, if the IRS does not accept your OIC.
• For 5 years from the time the IRS accepts your offer, compliance with the provisions of the IRS Code pertaining to paying your taxes and filing your returns is a must.
• It may take up to one year for the IRS to review an OIC and because of this, the statute of limitations (10 years) will be extended plus sixty days, regardless if the OIC was accepted or not. OICs pending for 2 years are deemed approved, though, under new regulations.
• You do not get to appeal or contest the tax debt balance if the OIC is accepted.
• You lose all tax refunds you may be expecting the calendar year the IRS accepts the OIC, including the interest for that period.
• You must disclose your entire financial history to the IRS. This could alert the IRS to something you did not declare in your forms and give the IRS reason to audit you.
• Defaulting on the OIC will cause the original amount owed plus interest and penalties to be reinstated in full. You will be given credit for the payments you did make.

If you would like help determining whether an Offer in Compromise is right for you, or whether some other IRS problem solution is more appropriate, give Tampa Tax Attorney, Darrin T. Mish a call at (888) 438-6474. He represents clients all over the United States and the world with IRS Problems.

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