The New Offer in Compromise (OIC) 2014
Every taxpayer that owes the IRS money wants to know whether or not they will qualify for the IRS Offer in Compromise. An IRS Offer in Compromise is an agreement between you and the IRS to permanently settle your tax debt for less than the amount you owe. For 2014, the IRS has made changes to the Offer and for the most part, these changes make it even better.
Before I get to the most recent changes, it is important that every taxpayer knows whether or not they will qualify for an Offer. The best way is to go to the IRS website and they have an Offer In Compromise qualifier. The other qualifiers that every taxpayer should know include:
- Make sure to file all tax returns that you are legally required to file
- Make all estimated tax payments for the current year (if you had a refund for the prior year you do not have to do this)
The IRS has made two big changes for the 2014 Offer which definitely changes things. First, the user fee to file the offer has been increased from $150 to $168, which is not the biggest change. However, before the recent change, if you owned a car or there was equity in your car you then had to make your offer for the equity in the car with a 20% discount. The new rule makes it if your equity is less than $3,400, you do not need to include this in your offer. In essence, you can now offer a lot less money if you have equity in a car.
If you want to learn more about the Offer in Compromise, give us a call at Wolf Tax a call.