What is Offer In Compromise?
Offer in Compromise is a tool that can be used by the taxpayers in order to help them resolve their back tax problems. OIC will help taxpayers reduce the total amount of the taxes that are in debt on their account. Offers in Compromise will only work for a group of people or business that has no ability to pay the total back taxes fully. Upon the submission of OIC, the back taxes will have a relatively lesser amount of deduction to the total tax that is needed to be paid.
Internal Revenue Services (IRS) is a US government institution responsible for collecting taxes for the people in Federal states. IRS desires to collect owed money even if they could not fully recover the total amount long as the taxpayer could pay. It is better and reasonable to receive a portion of the owed money instead of collecting all of the owed amounts while taking the hassle of it in the collection. Later, there could have a possibility that the amount that is collected would be relatively smaller than what is supposed to be collected, even in the price as indicated in OIC.
Offers in Compromise Las Vegas—Process
There are a number of things that could happen if the taxpayer became too careless about the amount that they owe to the IRS. Different unimaginable things could possibly happen. Since they knew that not all people could pay all of the taxes that they owed, IRS has created a helpful program—the Offer in Compromise.
With the program, many taxpayers are to clear their existing debts in their accounts.
Nevada Tax Commission (NTC)
The Nevada Tax Commission is the head commission of the Department of Taxation in Nevada (Las Vegas). This commission is the one that is adopting different regulations, audit policies, and enforcement, and it approves the procedures of the Department. This commission has the responsibility to hear and adhere to the appeals of the taxpayers in regards to their taxation issues, specifically in Las Vegas. Aside from that, they are the one who makes appropriate decisions in order to ensure that the taxpayers consistently make the tax applications in varying tax forms.
Role of Nevada Tax Commission (NTC) for Offer in Compromise Las Vegas
The Nevada Tax Commission is the one who would proceed with an Offer In Compromise for the taxes that is owed by the taxpayers—this includes any form of taxation, fees, contributions, interest, and penalty. The list that is included in any form of owed money to the Department, if proven that the taxpayer has inability l to pay the full amount, Offer in Compromise might be considered.
In any case that the NTC is processing the Offer In Compromise of a taxpayer, the collection activity that is being held by the department will be naturally halted. When the decision of the department has been made—either accepted or rejected—the collection would continue according to the newly agreed amount and form (if OIC is accepted).
Only the request that is made in writing is the one that the NTC will accept for Offer in Compromise. The writing, furthermore, shall include a detailed explanation of the reason why the taxpayer is requesting OIC.
Here is the process to get an Offer in Compromise Las Vegas:
The information that is going to be considered through being eligible for Offer in Compromise is the duly signed data filled up in Form 656—it is provided by the Internal Revenue Service. The IRS can identify whether the taxpayer is eligible for the program Offer in Compromise. In a basic description, Offers in Compromise is a monthly payment of the deducted amount of owed tax on a monthly basis.
Requirements for approval of Offer in Compromise
Just like other programs, there are specific situational requirements that are needed to be met before the IRS can consider the taxpayer’s request for OIC. As stated earlier, forms 656 and 433A are a requirement upon submission for application because it is where the IRS will base their decision—whether they will approve the request of the application or not.
Other than that, here are the requirements:
- Doubt as to Liability
In this requirement, it does not directly mean questioning of the taxpayer’s ability whether they can pay the owed tax in full amount. It could also mean that the taxpayer is appealing to the IRS that the total amount of the tax they owe should not be what the IRS has declared. From this, the IRS could potentially deduct a lesser amount of tax that they have declared for the taxpayer who has appealed—it is because the IRS aims to encourage the taxpayers to pay even a few amounts of the money they have been in debt with.
In this form of a request for OIC, the Personal Financial Statement and as well as Financial Information Statement for Businesses shall be completed before NTC can process the request. The duration of the submission of the previously stated requirement is only 30 days. It shall be sent to the Revenue Officer, along with other required documents.
What would happen if the taxpayer failed to submit the form?
If within 30 days, submission of the form has not been made by the taxpayer, a notification through writing will be sent by the department, stating that the collection process will be continued with the registered tax debt and that there will be no processing for OIC unless the information has been provided.
- Doubt as to Collectability
In this requirement, taxpayers need to convince the Internal Revenue Services that it is nearly impossible that the Taxpayer would be able to pay the amount that the IRS has stated. Taxpayers would need to prepare themselves and every requirement to be complied with, such as the declaration of total income, expenses, assets, and liabilities. These declarations are needed in order for the IRS to determine if the taxpayer has the financial means to pay owed taxes. In this extremely crucial examination, IRS would look at all the sources of income stated by the taxpayer, analyze them by means of subtracting basic expenses that are needed by the payer. If through the assessed data, the IRS found that the taxpayer could not fully pay the tax that is being owed, they will make the decision according to what they have concluded.
- Economic Hardship
This requirement will give the taxpayer a unique opportunity to convince the Internal Revenue Services that they are badly needed to settle a lower total of tax in debt so that the taxpayer should have lesser financial hardship. IRS might consider equity or an existing public policy which is enough a basis for the taxpayer to be eligible for an Offer in Compromise.
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