There are two types of Offers in Compromise (Doubt as to Collectability) that a taxpayer may make:
- Lump Sum Offer – Based upon Reasonable Collection Potential (RCP) variables of:
a) Net Equity in Assets
b) 12 months of Future Income
- Short-Term Deferred Offer – Also based upon RCP but this time with 24 months of Future Income.
My firm, By The Book Taxes, located in Norwalk, CT specializes in income tax preparation for individuals, families and self-employed people. By the Book Taxes also helps clients resolve their tax debts by preparing and filing Installment Payment Agreements, Offers-in-Compromise, Currently Not Collectible and Innocent or Injured Spouse applications.
For Lump Sum Offers the taxpayer is required to pay the application fee (currently $186) and put a 20% deposit (of the Offer amount) as a down payment. These payments should be made in two separate checks. Should the Offer be accepted, the taxpayer would then have to pay the remaining balance within five (5) months of acceptance.
For a Short Term Deferred Offer, the $186 fee is required, the 20% deposit is not required and the taxpayer must make monthly payments equal to 1/24th of the Offer amount while the Offer is being considered. Upon acceptance, the taxpayer must then pay the remaining balance in no less than 6 months and no more than 24 months.
For a more detailed explanation of RCP, read this blog, https://activerain.com/blogsview/5329707/norwalk–ct–the-secret-sauce-of-tax-resolution—-rcp- or watch this YouTube video, https://www.youtube.com/watch?v=9tdctyR7hYM
If you have years of unfiled tax returns or owe the back taxes, please call me. I can help.