Who is Eligible for an Offer in Compromise?

 
At DiLucci CPA Firm, we often assist our clients in exploring various avenues to manage their tax burdens. One such avenue is the Offer in Compromise (OIC) program the IRS offers. An OIC is an agreement between taxpayers and the IRS to settle a tax liability for less than the total amount owed. It’s a viable option for individuals who cannot pay their entire tax liability due to financial hardship or other extenuating circumstances. 

So, who is eligible for this program in Texas? Generally, you may be eligible if you cannot pay your total tax liability or if doing so would create a financial hardship. The IRS considers factors such as your income, expenses, asset equity, and overall ability to pay when determining eligibility. However, it’s crucial to understand that the OIC process is intricate, and the criteria are stringent. Only some people who apply will qualify.

 

Understanding the Offer in Compromise Process

When considering an OIC, it’s essential to have a clear and comprehensive understanding of your financial situation. This is where we come in. At DiLucci CPA Firm, we work closely with our clients, assessing their financial picture to help them determine if an OIC is the right choice for them. Our family firm, founded in 2005 and currently run by a father-daughter duo, prides itself on building long-term communicative relationships with our clients. We strive to maximize value for you, providing personalized and high-quality service.

To assess the eligibility for an Offer in Compromise (OIC), the IRS delves deep into the taxpayer’s financial standing, leaving no stone unturned. This comprehensive review is instrumental in ensuring the OIC program serves its purpose of providing relief to those genuinely in need while maintaining its integrity.

 

Taxpayers’ Ability to Pay

The IRS rigorously examines the taxpayer’s current income and juxtaposes it with their allowable living expenses. This comparison is crucial as it highlights any surplus income that could be earmarked for settling the tax debt. In addition, the IRS also takes into account the equity in the taxpayer’s assets. This includes scrutinizing real estate, vehicles, and other significant holdings to determine if these can be liquidated to satisfy the tax liability. It is not just about the present; the IRS also projects into the future, considering potential changes in the taxpayer’s financial scenario that may affect their ability to pay off the tax debt.

 

Taxpayer’s Income

When evaluating a taxpayer’s income, the IRS leaves no room for error. They carefully analyze the individual’s current and past income, aiming to understand the taxpayer’s financial capability to handle the tax debt. This analysis is not confined to the present; the IRS also forecasts future changes in the taxpayer’s income, weighing how these changes might influence their ability to settle the tax debt.

 

Expenses

The IRS meticulously reviews the taxpayer’s allowable living expenses, including essential aspects such as housing, utilities, food, and transportation. The goal is to determine whether the taxpayer is living within their means. If the IRS deems the taxpayer’s expenses excessive, it could lead to denying the OIC. This is because the IRS may conclude that the individual can trim down their expenses, thereby freeing up funds to repay the tax debt.

 

Asset Equity

Lastly, the IRS assesses the equity in the taxpayer’s assets. This is a critical step as it reveals whether the taxpayer’s holdings, such as real estate, vehicles, and investments, can be liquidated or leveraged to meet the tax liability. The aim is to determine the realizable value of these assets and understand how they can contribute to settling the tax debt.

 

The DiLucci Difference

Our firm not only assists individuals with tax resolution services but also caters to business owners needing regular accounting and tax services. We provide a holistic approach to financial empowerment, aiming to foster long-term growth in our client’s businesses and personal finances. We understand that facing tax issues can be daunting, and our goal is to guide you through the process, offering solutions that keep the IRS out of your life forever.

 

Get in Touch with Us at DiLucci CPA Firm

Don’t let the weight of tax debt hold you down. Call us at DiLucci CPA Firm to speak with a lawyer in Texas, call (972) 444-9934, or contact us online to schedule a consultation to help guide you through your Tax, Accounting, or IRS matter. Let us be your ally in achieving financial freedom and peace of mind.