In the nearly 30 year operation of Washington Tax Services, we've seen a lot of rule changes with the IRS in the Offer in Compromise (OIC) program, BUT never a development as generous as the most recent one. These new rules, originally created in the Spring of 2012, are truly a game changer and should have you strongly consider doing an OIC on your back tax debt!
First, what is an Offer in Compromise (OIC)?
The Offer in Compromise (OIC) is a procedure used to settle tax debts with the IRS. If the IRS determines you meet certain criteria, they might agree to settle your debt for $500, for example, on the $50,000 or whatever amount you owe.
Second, what's the biggest change to the OIC rules?
Previously, IRS settlements were calculated by multiplying 48 months of one's "allowable" disposable income.
Old rules: 48 months
So - if your disposable income was $500 - multiplied by 48 months = your settlement with the IRS would be $24,000.00* (*with many other factors to consider - of course - like assets, "allowable" expenses and statute of limitations).
New rules: 12 months
With the new rules? Only 12 months of disposable income is required or using the previous data set -- $500 multiplied by 12 months -- your settlement would be only $6,000.00!*
Bottom line: You pay 75% LESS than Before!
READ PART 2: "Can You Pay Off Tax Debt Before it Expires?" in our Offer in Compromise series HERE
