New Offer in Compromise Application Helps Taxpayers Settle Back Taxes and IRS Penalties
The Offer in Compromise (OIC) application process has been a challenging and burdensome process for many applicants. The privilege of being approved for a OIC closely resembles receiving amnesty from the IRS; you can save thousands of dollars in back taxes, IRS tax penalties and interest.
Recently, the IRS unveiled a simplified version of the OIC application form by splitting the original form into two parts: Form 656 and Form 656-B (Offer in Compromise Booklet). This new version of the application is more user-friendly and easier to understand for applicants. There is now a checklist to determine whether the request can be processed along with an improved worksheet to estimate the offer amount.
CCH (http://tax.cchgroup.com) reports:
IRS Simplifies Offer in Compromise Form
The IRS recently posted a simplified version of the offer-in-compromise (OIC) application form on its website. The Service has split old Form 656, Offer in Compromise, into two new forms to aid ease of use by taxpayers.
Two New Forms
The new forms are Form 656, Offer in Compromise, and Form 656-B, Offer in Compromise Booklet. Revised Form 656 has been reduced to four pages. Pages one and two include the taxpayer’s contact information, the reason for the offer and the proposed terms. Taxpayers may propose a lump-sum cash offer, a short-term periodic payment offer or deferred periodic payment offer. Taxpayers may designate a third party on page four of the revised form to discuss the OIC with the IRS.
New Form 656-B contains all of the instructions, checklists and worksheets previously found in Form 656. These include a checklist to determine if the offer can be processed and a revised worksheet to calculate the offer amount. The IRS has also updated the OIC lower income guidelines on the 2009 standards from the U.S. Department of Health and Human Services (HHS).
Simplification
Earlier in July, National Taxpayer Advocate Nina E. Olson repeated her call for the IRS to simplify the OIC process and make the application forms less burdensome. According to Olson, the IRS has “inexplicably underutilized” the OIC program.
Olson reported that the number of OICs accepted by the IRS decreased by 72 percent, from 38,643 in fiscal year (FY) 2001 to 10,677 in FY 2008. The IRS accepted 34 percent of the OICs submitted in FY 2001. In FY 2008, the IRS accepted 24 percent of OICs submitted.
By George L. Yaksick, Jr., CCH News Staff
The recent IRS improvement on the OIC application forms may increase your chances of being approved for a tax settlement–as long as your qualifications satisfy the requirements for your application to be processed.
Historically, Offer in Compromise requests have less than a 30% acceptance rate by the IRS and is still decreasing. Many rejected cases may be attributed to an unqualified applicant. Tax Resolution Services has a record of helping their clients get approved 90% of the time for Offer in Compromise requests (5 times the national average).
If you are thinking of applying for an Offer in Compromise, feel free to contact our team of experts for a free consultation. Call us at 866-IRS-PROBLEMS (1-866-477-7762) or visit our website at www.TaxResolution.com
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July 31st, 2009 at 2:08 pm
[...] Historically, OIC application approval rates have remained under 25%. Recently, the IRS has updated the OIC application forms so that it is easier for applicants to understand. This will increase accuracy rates on the [...]