Offer in Compromise Payment
The IRS No Longer Requires The Taxpayer to Immediately Come Up With All the Funds Once the Offer in Compromise is Accepted!
New IRS Offer in Compromise policies provide several options for making payments on an accepted Offer in Compromise.
Unless you have a special hardship case that warrants a lower Offer in Compromise amount, or can prove that you do not actually owe the tax bill, the IRS will generally apply the following principles in evaluating Offers in Compromise: In determining the amount that the IRS could collect from you, the IRS looks at the Reasonable Collection Potential to arrive at a minimum Offer in Compromise. In determining the Reasonable Collection Potential, the IRS looks at the following two factors: Your Realizable Value of your assets and your Future Income.
Generally an acceptable Offer in Compromise amount depends on the equity of your assets, your family's monthly income and how soon you are able to raise the money to pay off an acceptable Offer in Compromise. Once you submit an Offer in Compromise it may take the IRS roughly 6-18 months to investigate your Offer in Compromise. Therefore, the actual acceptance of your Offer in Compromise might not be issued for some time. Once you have received a notice of acceptance of your Offer in Compromise, you have the following options to make the payment:
Cash Offer
You must pay the cash offer within 90 days of acceptance. A Cash Offer in Compromise is figured by adding the realizable value of your assets, and the value of your disposable monthly income over 48 months.
Short Term Deferred Payment Offer
This payment option allows you to pay the Offer in Compromise in monthly payments over 2 years following the acceptance. A Short-Term Payment Offer in Compromise is figured by adding the realizable value of your assets, and the value of your disposable monthly income over 60 months.
Deferred Payments Offer
This payment option allows you to pay the offer amount in installments within the remaining statutory period for collecting the tax. The Offer in Compromise must include the realizable value of your assets plus the amount the IRS could collect through monthly payments during the remaining life of the collection statute. A Deferred Payment Offer in Compromise has three payment options:
- Option 1
Full payment of the realizable value of your assets within 90 days for the date the IRS accepts your Offer in Compromise; and
Your future income in monthly payments during the remaining life of the collection statute.
- Option 2
Cash payment for a portion of the realizable value of your assets within 90 days from the date the IRS accepts your Offer in Compromise; and
Monthly payments during the remaining life of the collection statute for both the balances of the realizable value and your future income;
- Option 3
The entire offer amount in monthly payments over the life of the collection statute. Just as with short-term deferred payment offers.