| Like a lot of things about taxes, what you don't know | | | | the long run. |
| can hurt you... and, you'll be surprised at what you might | | | | Don't Get in a hurry. |
| not know. | | | | You won't have an answer to your application for a |
| A lot of companies advertise that they can help you | | | | while. It takes the IRS an average of 6-7 months to |
| settle your tax debt for pennies on the dollar. They will | | | | complete a review of your OIC. If the IRS has your |
| also tell you their success stories regarding the amount | | | | application for more than 24 months without returning |
| clients have saved by filing an Offer in Compromise | | | | or rejecting it, they will have to accept it, but don't get |
| (OIC). But they don't want you to know any of the | | | | your hopes up, they know the rules so that rarely |
| following facts regarding OICs. | | | | happens. Keep in mind that if your OIC is rejected, your |
| Your chances aren't very good. | | | | CSED (Collection Statute Expiration Date) will be |
| In 2009, only 1.1 out of 1,000 people who owed the IRS | | | | extended. |
| money had an OIC accepted. You may happen to be | | | | Your refunds become property of the US Treasury. |
| one of the few, but the odds are pretty high that you | | | | The IRS will keep any refund due to you through the |
| won't. | | | | year in which the OIC is accepted. That money will be |
| Get out your checkbook. | | | | applied to your tax liability. Logical as it may seem, you |
| The IRS won't even consider your OIC if you don't | | | | cannot include in your offer amount any amount that |
| send in the required payments. In most cases, unless | | | | you expect to receive as a refund. |
| you meet the rules for exemption, you must pay 20% | | | | Don't mess up again. |
| of your offer amount with the application, along with a | | | | By signing your OIC application, you agree to file and |
| $150 application fee. Based on 2009 averages, you | | | | pay your taxes for the next five years if your OIC is |
| would need to send the IRS $3,010 to cover the down | | | | accepted. This means if you file a tax return with a |
| payment and application fee. | | | | balance due after your OIC is accepted, you will have |
| They aren't cheap. | | | | to be prepared to send that amount to the IRS. If you |
| The average amount per accepted OIC was | | | | fail to do so, the IRS will re-assess you the tax liability |
| $14,296.45 in 2009. That's actually more than the | | | | (minus any payments that were made as part of the |
| average balance of an individual who owed the IRS, | | | | OIC) and could proceed with collection activity. This |
| which was $10,680. You would be well advised to | | | | means no unfiled tax returns. |
| check out all other alternatives that may be cheaper in | | | | |