An Offer in Compromise (OIC) is a program administered by the IRS that allows eligible taxpayers to settle their tax debt for less than the full amount owed. This can be a viable option if paying your full tax liability would create a financial hardship or is otherwise unmanageable.

At Z Tax & Accounting, we help individuals and businesses determine eligibility, prepare and submit OIC applications, and navigate the entire process to achieve the best possible outcome.

How an Offer in Compromise Works

The IRS evaluates an OIC based on your unique facts and circumstances, including:

• Ability to pay
  
  

• Income
  
  

• Expenses
  
  

• Equity in assets
  
  

An OIC is generally approved when the amount offered represents the most the IRS can reasonably expect to collect within a reasonable period.

Important: The Offer in Compromise program is not for everyone. Explore all other payment options, such as installment agreements, before submitting an offer.

Who Is Eligible for an Offer in Compromise

You may be eligible to submit an OIC if you:

• Filed all required tax returns and made required estimated payments
  
  

• Are not in an open bankruptcy proceeding
  
  

• Have a valid extension for a current year return (if applying for the current year)
  
  

• If you’re an employer, you have made tax deposits for the current and previous 2 quarters before applying
  
  

If your OIC is submitted and you are not eligible, the IRS will:

• Return your application and $205 application fee
  
  

• Apply any offer payment you submitted to your balance due
  
  

How to Submit an Offer in Compromise

1. Prepare Your Application Package
   
   

   • Form 656-B: Offer in Compromise Booklet
     
     

   • Form 433-A (OIC) for individuals or Form 433-B (OIC) for businesses
     
     

   • Include all required supporting documentation
     
     

   • Separate Form 656s for individual, corporate, LLC, or partnership debt
     
     

   • $205 application fee (non-refundable)
     
     

   • Initial payment based on your chosen payment option
     
     

2. Mail or Submit Online
   
   

   • Mail your application to the site listed on Form 656-B
     
     

   • Or submit electronically via the IRS Individual Online Account
     
     

Choosing a Payment Option

• Lump Sum Cash Offer:
  
  

  • Submit 20% of the total offer with your application
    
    

  • Pay remaining balance in five or fewer payments if accepted
    
    

• Periodic Payment Offer:
  
  

  • Submit initial payment with your application
    
    

  • Pay remaining balance in monthly installments while the IRS reviews your offer
    
    

Low Income Certification: If you meet the low-income criteria, you may skip the application fee, initial payment, and monthly installments while the IRS reviews your offer.

Understanding the OIC Process

Once submitted:

• Non-refundable payments and fees are applied to your tax liability
  
  

• The IRS may file a Notice of Federal Tax Lien
  
  

• Other collection activities are suspended during evaluation
  
  

• You must make all required payments per your offer
  
  

• Your offer is automatically accepted if the IRS doesn’t respond within two years (excluding appeals)
  
  

If Your Offer Is Accepted

• You must comply with all terms listed in Section 7 of Form 656
  
  

• File all required tax returns and make all payments
  
  

• Federal tax liens are not released until terms are satisfied
  
  

• Certain OIC information may be available for public inspection
  
  

If Your Offer Is Rejected

• You may appeal within 30 days using Form 13711, Request for Appeal of Offer in Compromise
  
  

• The IRS Independent Office of Appeals can provide further assistance in disputing the rejection
  
  

Why Work with Z Tax & Accounting

The OIC process is complex and requires precise documentation, calculations, and compliance. At Z Tax & Accounting, we:

• Determine your eligibility for an Offer in Compromise
  
  

• Prepare and submit accurate application packages
  
  

• Represent clients in negotiations and appeals
  
  

• Ensure maximum savings and compliance while protecting your rights
  
  

📞 Contact Z Tax & Accounting today to learn if an Offer in Compromise is right for you and get professional assistance through every step.

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