But statistically, the odds of getting a compromise offer from the IRS are quite low. In most cases, the IRS will not accept an OIC unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (RCP). CPR is the IRS's way of measuring a taxpayer's ability to pay. The RCP includes the value that can be obtained from the taxpayer's assets, such as real estate, cars, bank accounts and other assets.
In addition to property, the RCP also includes anticipated future income minus certain amounts allowed for basic living expenses. The commitment offer program has an acceptance rate of 40.03%, so you have a good chance of being eligible for a commitment offer yourself. Many people have seen the various national tax agencies on daytime television offering to settle their tax debt with cents on the dollar. However, what's left out of their sales pitch is that nearly 80 percent of IRS compromise offers are rejected for a variety of reasons.
This isn't all a bad thing, but it requires strategic planning on the part of the taxpayer. A good rule of thumb is that the IRS is likely to approve offers that propose the supposed maximum amount of money they can expect to collect within a reasonable period of time. If you find an accredited taxpayer clinic in your area to guide you through the process of filling out the application, your application may be more likely to be accepted. However, there is nothing to stop you from resubmitting the offer once the deficiency has been corrected.
A transaction offer is an IRS tax relief program that allows eligible taxpayers with financial difficulties to pay only a percentage of their total debts due so that their debts are fully settled. If you can't prove how your income will remain low, you may not qualify for an OCI or you may be faced with an offer that is too high to pay to settle your tax bill. After all, the IRS has an incentive to accept your offer, since some money for the government is better than none. Instead of trying to manually calculate the value of the offer you want to propose to the IRS, you should use a commitment offer calculator to avoid any mistakes.
Here are some tips on how to write a winning offer and achieve higher acceptance rates in your office. When submitting a periodic payment offer, the taxpayer must include the first proposed installment payment along with Form 656. Second, IRS offer examiners may have questioned the calculation of anticipated future income by proposing that wage earners calculate their average income over a longer period of time. Ideally, this should have been done before the rejection letter was sent, but sometimes you can save an offer from the ashes with a little finesse and a good argument. If you have reason to believe that you might qualify for IRS debt forgiveness through a compromise offer, you should take a look at the offer in the commitment brochure and on Form 656. Finding the right amount to offer is an art, and for that, you must employ the use of a reliable tax offer to reach a compromise.
calculator. If accepted, the appeal will give the taxpayer the opportunity to renegotiate their rejected offer on terms more favorable to the IRS.