Check this out…IRS is easing there “Offer in Compromise” terms to reflect actually current hardships of taxpayers that owe past due taxes.
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The Internal Revenue Service has expanded its “Fresh Start” campaign by easing terms to its Offer in Compromise (OIC) program, enabling the most financially strapped taxpayers to clear up their tax bills more quickly.
The IRS said the more flexible terms focus on the financial analysis used to determine which taxpayers qualify for an OIC, an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed.
An OIC is generally not approved if the IRS believes the liability can be paid in full as a lump sum or a through payment agreement.
The IRS examines the taxpayer’s income and assets to determine the taxpayer’s “reasonable collection” potential.
The OIC modification enables some taxpayers to resolve their tax problems in as little as two years, compared to four or five years in the past.
In certain circumstances, the new announced changes include:
- Revising the calculation for the taxpayer’s future income.
- Allowing taxpayers to repay their student loans.
- Allowing taxpayers to pay state and local delinquent taxes.
- Expanding the Allowable Living Expense allowance category and amount.
“This phase of Fresh Start will assist some taxpayers who have faced the most financial hardship in recent years,” said IRS Commissioner Doug Shulman. “It is part of our multiyear effort to help taxpayers who are struggling to make ends meet.”
When the IRS calculates a taxpayer’s “reasonable collection” potential, it will now look at only one year of future income for offers paid in five or fewer months, down from four years – and the agency will now review two years of future income for offers paid in six to 24 months, down from five years.
All offers must be fully paid within 24 months of the date the offer is accepted. The Form 656-B, Offer in Compromise Booklet, and Form 656, Offer in Compromise, has been revised to reflect these changes.
