How to make an Offer
Applying for an OIC involves more than just filling out a form and crossing your fingers. Here's a breakdown of the steps:
1.Check Eligibility: The IRS has strict guidelines for those who qualify for an Offer in Compromise.
They'll examine your income, expenses, assets, and ability to pay.
The key is proving that paying the total amount would create an undue financial hardship.
2.Complete the Necessary Forms: Form 656 (Offer in Compromise) and Form 433-A (Collection Information Statement for Wage Earners and Self-Employed).
These forms ask for detailed information about your financial situation—like a financial autobiography but with way more numbers.
3.Submit the Initial Payment: The IRS requires an initial non-refundable payment with your application.
If you're offering a lump sum, you must include 20% of the offer amount.
You'll need to make monthly payments for a payment plan while the IRS reviews your application.
4.Gather Supporting Documents: Along with the forms, you'll need to provide documents like bank statements, pay stubs, and proof of expenses.
The IRS wants to see the whole picture before making a decision.
5.Wait (Patiently): The IRS can review an Offer in Compromise for several months.
They might ask for additional information during this time, so be prepared to provide it.