You probably have all heard of the television or radio commercials whereby some company promises to settle your delinquent federal taxes for pennies on the dollar. But here is what those commercials do not tell you about the OIC program.
The OIC is the program if you meet certain qualifications you can settle your past delinquent federal taxes for pennies on the dollar. But not everyone can qualify for this program and it takes a lot of work to be successful. So here are the basics.
First you must file any past tax returns that you never filed even if you do not owe any money. If for example you never filed your 2006 tax return, then you must file it.
Next you have to make a complete financial disclosure to the IRS on all of your assets, income and expenses. If you own a house you must disclose the fair market value of the house along with the mortgage balance. You will also have to disclose any checking or savings accounts that you may have and must give the IRS not one, not two but three months worth of bank statements.
Of course they will also want to know if you have any brokerage accounts, mutual funds or any stocks and if you are about to inherit any money from your long lost uncle. You will also have to disclose any vehicles that you own and whether or not you have any auto loans. Often I will have a client who is driving a vehicle that is 15 years old and they just do not think to let me know. But when it comes to vehicles the Internal Revenue Service will check the records of the Department of Motor Vehicles. So you better disclose all your vehicles, even the very old ones.
Now after you have disclosed all of your assets, you must report all of your income. This includes income from a W-2 job, self employment income, unemployment income, disability income, or any interest or dividend income from investments.
After disclosing all of your assets and income, you then detail all of your expenses. So you will disclose your mortgage or rent payments, utilities, auto expenses for gas or insurance, medical expenses either out of pocket or for health insurance. You will also list any other taxes you are currently paying to a state or local city. Finally if you are making any child support payments or you have credit cards and are making the minimum monthly payments, then these expenses would also be listed.
Now of course after disclosing the above expenses you will have to provide the necessary supporting documents to the IRS so that they know you are not just making up the numbers.
So this basically includes all of the financial information that you must provide to the IRS. The Offer in Compromise Program is a great way to legally reduce and eliminate your delinquent taxes. However it is very, very complicated and you must have professional advice and assistance to be successful.
Dealing with the Internal Revenue Service can be very difficult and expensive for the average person or business. You must be well prepared when dealing with the IRS. The author has over 20 years of experience in successfully helping his clients with the IRS.