For many, the phrase “tax debt” is a daunting and stressful set of words. Paying any sort of debt is stressful, but with tax debt especially, and depending on how much you owe, you can be hounded by the IRS for a long time. It can be extremely difficult to pay off tax debt: you could owe an outstanding amount that you’re only able to pay in small intervals while still struggling to support yourself. But – even though there is no way to be completely free from it – there are solutions that can reduce the amount you owe. One of which happens to be the Offer in Compromise program; a program that’s accompanied by both pros and cons.
The Offer in Compromise (OIC) program can significantly benefit you by reducing the total amount you owe in taxes. And while this may seem like a good solution for many with tax debt, it’s important that you know about its advantages and disadvantages. Which you can read about below.
The Pros & Cons of an Offer in Compromise
Before you make any decision on tax resolution it’s always best to have a CPA on your side assisting you. There are both pros and cons in making an Offer in Compromise to resolve your tax debt problems. A CPA, such as Robert E. Clark, can help determine if making an OIC is the best solution for you and your overwhelming tax debt.
Affordable Payments & Debt Reduction
OICs grant those who qualify the opportunity to lower their debt and have a batter chance to pay it off without sacrificing their assets or earnings. The program will allow you to negotiate your obligation to an affordable amount. This affordable amount could be one that can be paid off with a few easy payments or even with a single payment. By continuing to make these payments until your debt is gone, you can protect your income and keep control over your bank account.
Prevent Seizing of Assets
The most critical thing any person who is struggling to pay in tax debt is to keep control over your bank account and earnings. Living from paycheck to paycheck is a struggle and it can be even worse when you have tax debt. The IRS can garnish your earnings and seize your assets if your debt isn’t being paid properly. But an OIC can prevent these IRS collection activities. Once an offer is accepted within the OIC program, the lien on your paycheck and assets should be lifted.
Long-Standing Obligation Resolution
You may have known about your tremendous tax debt for years, yet probably had little means to deal with it effectively. Utilizing an OIC can bring this long-lasting issue to an end. With the offer accepted, you can pay off your debt and move forward, knowing that you no longer owe the government any money.
Not Meeting The Qualifications
OICs are best suited for those who are low-income taxpayers and those who have very few assets that the IRS can claim. If you are deemed to make too much money or have too many assets that can be liquidated to pay off your debt, your OIC can be rejected. More so, after rejection, you’ll be scrutinized for your finances and possessions.
You’ll No Longer Be Able to Claim Tax Credits
If you benefit from tax credits each year, you’ll probably have to surrender your right to them when you make an OIC. If your OIC is accepted and the amount you owe is lowered, you’ll have to forfeit your ability to claim certain credits on your income tax returns the following year. Most taxpayers count on these credits to boost their tax refund and if your one of them who had to make an OIC, your refund could be lowered significantly.
OICs become part of public record once accepted and anyone can discover you’ve settled your tax debt through OIC. By making an OIC you sacrifice your privilege to keep your financial transactions private.
Contact Robert E. Clark to See if OIC is Right For You
If you need assistance in tax resolution due to tax debt that needs to be paid off, then don’t hesitate to contact Robert E. Clark, CPA of South Florida. Robert E. Clark has served countless clients for many years and has successfully assisted patrons to keep their finances in check as well as get them out of financial problems. We’re more than confident that when you hire Robert E. Clark for your financial needs, you’ll be satisfied with the results. For any inquiries, you may call us at 305-363-5429 or visit our contact page.