Death and taxes…You know what I mean. No one can avoid either of them. But life sometimes just so tough, and we can’t afford the big amount of taxes. Will the IRS give a helping hand?
The answer is YES, but only under certain circumstances.
It must be noted that the IRS rarely forgive tax debts. Only when they take a look at your financial conditions and find out that they can’t collect taxes more than you can possibly pay, they will give you a partial forgiveness, which is after your application of the IRS debt forgiveness program.
The form 656, offer in compromise (OIC), is the form that can be used to apply for. This is an agreement between you and the IRS, which allows you pay less than the full amount of the taxes you owe.
There are others forms to file in order to complete the application, but before filing, you must make sure that you are eligible for an OIC. Basically there are 4 requirements you must satisfy or your offer will not be considered by the IRS:
- 1) file all required tax returns
- 2) have a bill for at least 1 tax debt
- 3) make all required estimated payments for the current year
- 4) make all required federal tax deposits if you are a business owner
Also, people who are in an open bankruptcy proceeding are not eligible.
If you haven’t filed required tax returns, an initial payment will be applied with your application. Apply for an OIC charges $205 application fee. You should submit the forms and fees together to finish the application. All these fees are non-refundable.
If your OIC is accepted, congratulations! That will ease your financial difficulty to some extent. If you find out that your offer is rejected, you can try to appeal the decision.