The IRS Offer in Compromise (OIC) program is available to business taxpayers, including currently operating businesses. You may be able to settle both personal and business tax debt with one OIC or two separate OICs, depending on the type of business you run.
If your business is a sole proprietorship, you can use one OIC form for both personal and business tax debt. For all other types of businesses, you must separate two separate OIC forms if you want to settle both personal and business tax debt.
Single member LLCs that are taxed as sole proprietorships can only be put on an individual taxpayer OIC form if the tax debts were incurred before January 1, 2009. Otherwise, these debts should be included on a business OIC form.
If you need to submit two OIC forms, you’ll also need to submit two application fees and two initial payment amounts.
You can use a business OIC to settle income taxes or delinquent payroll taxes. Make sure you have filed all your delinquent tax returns because the IRS won’t consider offers if you have unfiled returns.
Another potentially disqualifying situation involves unpaid trust fund taxes. These are taxes withheld from your employees’ wages for income taxes, Medicare, and Social Security taxes.
You generally need to pay all trust fund taxes or the trust fund recovery penalty must have been assessed against all potentially responsible persons.
If you meet these requirements, then the general rule of OICs apply. The most common reason taxpayers submit OICs is because of doubt as to collectibility, which requires that you are unable to pay off your tax debt full using your disposable income and equity in assets.
Businesses often need certain assets in order to function and produce income. If you have equity in these assets, the IRS may want to argue that you could sell these assets and pay off your tax debt.
However, you may be able to negotiate the amount of equity that the IRS includes in your reasonable collection potential. This could reduce your minimum offer amount enough to make the OIC financially feasible for you and acceptable to the IRS.
Consult a business tax resolution attorney to get assistance developer your business Offer in Compromise or exploring other tax relief strategies.
Get help settling your tax debt by calling The Gartzman Law Firm at (770) 939-7710. We can help you protect your assets and find a creative solution to your tax problems.