IRS & New York Offer in Compromise Help

What Is an Offer in Compromise? 

The IRS and NYS DTF allow eligible taxpayers to settle unpaid tax bills for less than the full amount with something called an offer in compromise (OIC). There are several reasons the IRS or NYS DTF can grant this tax relief, but the most common is for financial hardship.

However, there are strict qualification requirements and a few potential downsides. Both the IRS and the New York State DTF will grant an OIC request only after a thorough review of the taxpayer’s finances. If that review reveals that there’s no realistic chance of collecting the full tax amount by the collection statute expiration date, and the offer represents what they can expect to be able to collect, then the IRS or NYS DTF is likely to accept the proposed offer.

Because not everyone qualifies for an OIC, only certain taxpayers should apply. It’s also important to note that both the IRS and New York DTF have their own OIC programs, both of which have their own application forms, eligibility standards, rules, and processes.

This is why it’s important to work with an experienced tax pro who can assess your eligibility and employ the most effective strategy possible, especially if you’re dealing with both state and federal taxes. At McLaud Law P.C., our tax resolution team has extensive experience with submitting both IRS and New York OICs. We can evaluate your tax case to decide which program you may be eligible for and what you need to do to apply. 

Situations to Consider an OIC 

You should consider an IRS or NYS OIC if one or more of the following scenarios apply to you:

• You owe New York or the IRS an amount you can’t realistically pay in full.
• You possess limited assets or equity in property.
• You have a permanent loss or reduction in earning capacity, due to age, illness, or other reason.
• You’re closing a business with outstanding payroll or sales tax balances.

The point to remember is that an OIC is best for those who have financial limitations that prevent them from paying off their tax bill, and those limitations are expected to continue. McLaud Law P.C. can help assess how well you fit this requirement. 

If you’re facing the prospect of IRS tax levies, IRS tax liens, or NYS tax warrants, you shouldn’t wait. Contact us for help as soon as possible. If an offer in compromise isn’t the right option for you, we’ll help you find another path to tax debt resolution. 

How a Tax Professional Can Help If You’re Considering an OIC 

If it turns out an OIC is the right option for your situation, a tax attorney can help in several ways:

• Complete a full financial analysis, taking both IRS and New York DTF requirements into consideration.
• Help you meet basic eligibility rules by filing back taxes if needed. 
• Confirm the collection statute of limitation deadlines on your tax debts.
• Complete the application forms, including the federal collection information statements (Form 433-A for individuals or 433-B for businesses).
• Craft a compelling narrative that presents your personal circumstances in the best light.
• Negotiate with the OIC examiner on your behalf, to fight against their attempts to reject or alter your offer.
• Provide continued representation before the IRS or NYS Department of Taxation and Finance in case the government makes a mistake, and you need to file an appeal. 

Having McLaud Law P.C. help with your NY or IRS OIC allows you to take full advantage of our experience to provide the best opportunity for OIC acceptance. 

Risks of Filing an OIC Without a Strategy 

Our experienced tax resolution team ensures you use the best strategy possible when applying for an offer in compromise. That means timing the application carefully, taking full advantage of the IRS and NY’s allowed expenses, and presenting any extenuating circumstances as persuasively as possible. 

Unfortunately, when taxpayers apply on their own or work with an inexperienced pro, the lack of strategy can lead to problems like:

• Submitting an unreasonable offer and forfeiting your application fee and initial payment, although they will be applied to your tax debt. 
• Losing tax refunds due to mistimed applications or failure to address excessive withholding from your paycheck or other payments. 
• Inadvertently waiving your right to challenge the amount of your tax liability.
• Extending the IRS’s time to collect by applying for offers on tax debt that is close to its collection expiration date. 
• Retroactively losing the offer due to a misunderstanding of the compliance requirements after your offer is accepted. 

These problems are common but very avoidable if you work with the right pro. Many tax relief firms that offer OIC services take a volume-based approach with their clients. They file as many OIC applications as possible and hope for the best. We at McLaud Law P.C. don’t work this way – we use strategy to get the best settlements possible for our clients. 

When You Might Want to Consider Other Options

If any of the following apply, an offer might not be the best option for you:

• You can afford to pay off your tax debt over time.
• The statute of limitations for collecting the tax debt will run out soon.
• Your financial hardship will end soon.
• You own significant assets, especially those that are not necessary to your finances.

If it turns out we conclude that an IRS or New York OIC isn’t ideal for you, we’ll help you choose another option. Depending on your unique situation, we may recommend:

• Installment agreements (including partial payment installment agreements)
• Currently Not Collectible (CNC) status
• Bankruptcy
• Waiting for the collection statute of limitations to expire
• Tax appeals 

Don’t Let Your Tax Debt Problems Escalate

Whether you use an OIC or any of the previously mentioned tax relief solutions, it’s important to act promptly. Failing to take any action could result in:

• Bigger tax bills due to penalties and interest.
• Liens, property levies, and warrants.
• Wage garnishment and/or bank levies.
• Personal liability for business taxes or a Trust Fund Recovery Penalty (TFRP) assessment.
• Case assignment to an IRS revenue officer.

Our tax attorney can help you avoid these consequences or advise you on how to fix them if they’ve already started. 

How McLaud Law Can Help With an Offer in Compromise 

Unlike many other tax relief companies, McLaud Law P.C. is led by a tax attorney and also an enrolled agent. This offers a unique set of skills and experiences that combine legal tax analysis and IRS and DTF tax negotiating skills. Our firm also handles a variety of New York State tax matters, which is something few tax resolution firms provide.

You can learn a lot from the internet about an OIC and whether you might qualify – but even the best-written information lacks nuance and doesn’t cover the full scope of IRS and NY tax settlements. You need personalized help because every case is unique. We can analyze your case and determine the risks and benefits of requesting an OIC. 

Whether you’re an individual or business taxpayer, we can help you find solutions to your tax problems. To learn more, contact us to schedule a consultation for IRS and NY OIC help.

IRS & NY Offer in Compromise FAQs 

Do I qualify for an IRS OIC? 

It’s impossible to say without knowing your full financial history. The overarching general principle is that the IRS won’t accept an offer unless it believes it can’t collect the full tax debt before the statute of limitations for tax collection expires. Assuming that applies to you, you’ll still need to meet other eligibility requirements, such as being current on all required tax return filings and not being in a current bankruptcy proceeding. 

What are my chances of the IRS approving my offer? 

The answer really depends on your finances. Statistically, the IRS typically accepts just under half of OICs from individual taxpayers and about a quarter of OICs from business taxpayers. You can improve your odds by retaining experienced professional representation.

How long does the OIC process take? 

Timelines vary, but can easily take up to a year. If the IRS doesn’t make a decision within two years of receiving the offer, it’s automatically accepted. 

What’s the difference between an OIC being returned or rejected? 

A returned OIC means the IRS couldn’t process the offer you submitted, usually because of missing documents or incomplete forms. If the IRS rejects your offer, it means the IRS reviewed your application but decided not to approve it. You’re allowed to appeal a rejected OIC. 

How’s New York’s OIC process different from the IRS’s? 

Broadly speaking, they’re pretty similar. However, New York has slightly different requirements and standards for reviewing an offer.

Can my business apply for an offer in compromise? 

Yes, both the IRS and NYS DTF will accept OIC applications from individuals and businesses. 

Will filing an OIC stop IRS wage garnishments or levies?

Yes, filing an OIC usually pauses most collection actions, such as property levies and wage garnishment.

This communication is Attorney Advertising. It is presented for informational purposes only and does not constitute legal advice. Every legal situation is different, and prior results do not guarantee a similar outcome. This communication does not create an attorney-client relationship between McLaud Law P.C. and the recipient.

Sources

– https://www.irs.gov/payments/offer-in-compromise

– https://www.taxpayeradvocate.irs.gov/wp-content/uploads/2020/09/ARC18_Volume2_05_StudyOIC.pdf

– https://www.irs.gov/businesses/small-businesses-self-employed/offer-in-compromise-faqs

– https://www.tax.ny.gov/enforcement/collections/oic.htm

– https://www.irs.gov/filing/time-irs-can-collect-tax