If you own a business and have employees, you must file all returns and be up to date with all your federal tax deposits. Start the process of evaluating your situation, your ability to pay and the amount you offer. LITCs represent people whose incomes are below a certain level and who need to resolve tax issues with the IRS. These two options may be better than an OIC, since they don't always require you to sell or borrow with your assets to pay.
A commitment offer is an option if you can't return the full amount you owe from your future income and assets. If the IRS rejects your offer, it won't refund your application fee or any other payments you made with the offer. Paying off any type of debt is stressful, but especially with tax debt, and depending on how much you owe, the IRS can harass you for a long time. The OIC when in doubt about collectability is for people who are unlikely to be able to pay the IRS before their collection period expires (usually 10 years from the date the IRS evaluates the tax).
When you are “up to date” and comply with the rules, you and your tax lawyer will be prepared to complete and submit the IRS offer on commitment form 656 and form 433 for your offer. Taxpayers who don't meet these calculations may find that they don't qualify or that they're offered a higher offer amount that they won't be able to afford in the future. One of them is the Offer in Compromise program, a program that has advantages and disadvantages. But what is it and how does it work? In this blog post, we'll discuss the IRS commitment offer program, including the eligibility criteria, the benefits of the IRS tax debt commitment program, and whether or not an IRS tax lawyer can help you determine if this option is right for you.
Considering the advantages and disadvantages of an OCI, it may be worth opting for this option to reduce your tax liability to a level that is consistent with your current ability to reimburse. When the IRS considers an offer to be a commitment, it takes a toll or, basically, freezes it while your request is reviewed. You may have known about your enormous tax debt for years, but you probably had little means to manage it effectively. As long as the IRS reviews your offer, this will mark the effective date of the collection law and will cause your “statute of limitations” to be extended beyond 10 years.