OIC Payment Options

If you have been approved for an IRS Offer in Compromise to facilitate repayment your IRS tax liability, the next step is to understand what your payment options are.

To begin with, a taxpayer will generally have to pay an application fee of $150 along with their initial payment-both accompanied by Form 656.  Then tax liability itself can be resolved in one of the following three payment methods:

Lump Sum Cash Offer – Contrary to the name, this option does not require the amount to be paid in one, single payment.  The taxpayer has five (or fewer) installments in which to cover the full debt, upon written acceptance.  Each installment is non-refundable.  To submit the offer, 20% along with the filing fee and Form 656 must be sent to the IRS.  The IRS enforces a few other constraints that come into play depending on the length of time being used to pay the installments.  Visit the website on Offers in Compromise, or ask you tax relief specialist to clarify these stipulations.

Short Term Periodic Payment Offer -The taxpayer agrees to pay the amount within 24 months, and must submit the first installment along with the filing fee and the Form 656.  Regular payments must be made during the investigative process.

Deferred Periodic Payment Offer – Payable in non-refundable installments, this offer is to be paid over the remaining statutory period for collecting the tax.  As in the other two options, the filing fee and first payment are due with the Form 656, and regular payments nust be made during investigation.

We’ll discuss more on Offers in Compromise in future posts.

Disclaimer:  The information contained in this article is in no way intended for use as legal tax advice.  No assumption should be made that a tax attorney, enrolled agent or former IRS employee was involved in the creation of any content herein.  Advice on personal or business tax matters can be obtained by contacting Advanced Tax Help at (800) 970-8704, or by logging on to www.advancedtaxhelp.com