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). The RCP is how the IRS measures a taxpayer's ability to pay. A commitment offer (OIC) is when the IRS accepts an amount less than the total amount the taxpayer owes. You can pay a lump sum over five months OR make monthly payments over a 24-month period.
The partial payment in installments agreement allows you to pay the IRS monthly, but your full payment won't cover your full tax bill before the collection deadline expires. LITCs can represent taxpayers in audits, appeals and tax collection disputes before the IRS and in court. This amount is called the offer amount and represents an estimate of how much the IRS will accept to settle a tax bill. A copy of the letter of acceptance, which has been sent to the Federal Records Center, can be found in the offer file.
Before submitting a commitment offer with a liability question, you should understand the difference between the liability question and the collectability question. The IRS also takes a close look at whether a substantial amount was withdrawn from your retirement accounts before filing your OIC. If the amount of the offer doesn't match what you want it to be, simply indicate the amount of the offer however you want. The calculations of net realizable capital in assets and monthly disposable income incorporate many complicated rules that you must follow to correctly calculate your OIC rating and the amount of the offer.
As an independent organization within the IRS, the Taxpayer Advocate Service helps taxpayers resolve problems and recommends changes to avoid them. However, if your situation is complicated, you are self-employed, or have any of the special circumstances described in this post, you should seek professional advice. If you do not make the payment, the offer will be withdrawn and returned to you without the right to appeal. Keep a detailed record of the dates: If the IRS does not reject, return, or you withdraw your offer within two years from the date the IRS receives it, the offer will be considered accepted.
Form 8821 does not authorize the designated person to speak on their behalf or to defend their position before the IRS. You can complete the prequalification tool to see if you are eligible for a commitment offer. The right of retention will be released if your offer is accepted and the amount of the agreed offer has been paid in full. If you receive a good package in the mail that is well organized and the numbers are very clear, the offer is more likely to be accepted on the spot rather than having to go through an analysis.