Are you feeling overwhelmed by tax debt? You’re not alone. Many Texans find themselves in a similar situation, worried about how to pay what they owe. But there’s good news: an offer in compromise (OIC) could be the lifeline you need.
This powerful tool can help you settle your tax debts for less than you owe. Read on and discover how it might be the key to ease your financial stress.
What is it, and how can it help?
An OIC is an agreement with the Internal Revenue Service (IRS) that allows you to address your tax liabilities for less than the full amount owed. The agency might accept an OIC for several reasons:
- Doubt as to liability: There’s a dispute about the amount or existence of the tax debt.
- Doubt about collectability: Your income and total assets are less than the total tax liability.
- Effective tax administration: Even if you owe the tax and can technically pay it, requiring full payment would cause hardship or be unfair due to exceptional circumstances.
When considering an OIC, the IRS evaluates your ability to pay based on your reasonable collection potential (RCP). The RCP includes the value of your assets, such as property, vehicles and bank accounts.
Address your tax debts
Facing tax debt can be incredibly stressful, but you’re not alone in this journey. You can make informed decisions about your future by understanding your options.
It is imperative to consult with a qualified professional if you are contemplating an OIC. By seeking legal counsel, you can effectively navigate the complexities of this process and ultimately achieve a more stable and sustainable financial footing.
