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How to deal with the irs

how to deal with the irs

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Determine whether you qualify for an OIC. Generally, the IRS uses three criteria to determine whether you'll be considered. The first consideration is called Doubt of Collectibility. For you to qualify under this category, the IRS must have evidence that---based on your income, expenses and assets---you'll never be financially able to pay your tax debt in full. With the second category, known as Doubt of Liability, the IRS agrees to a compromise because there is a legitimate doubt as to whether the tax assessment is correct. And with the last category, Effective Tax Administration, the IRS and the taxpayer agree to the amount and accuracy of the tax liability but find that paying the tax in the full amount would prove to be an economic hardship for the taxpayer.

Complete IRS Form 656 and attach the $150 processing fee as well as a payment on the tax owed. On Form 656, you will need to indicate whether you are willing to make a one-time lump sum payment to cover the tax debt, a short-term periodic payment

offer, or a deferred period payment offer. A lump sum payment must be paid in full in no more than five payments after the taxpayer is notified of the acceptance of the OIC. If a taxpayer opts for this choice, he or she will need to include a down payment of 20 percent along with Form 656. For the short-term period payment, the tax debt must be paid within 24 months of the offer being accepted by the IRS, and for the deferred periodic payment offer, the tax must be paid over the statutory period for collecting the tax.

Make your two checks or money orders, one for the $150 fee and one for the initial payment, payable to the U.S. Department of Treasury. If you are a wage earner, self-employed person with no employees, or retiree, mail your application to:

Memphis Internal Revenue Service

Center COIC Unit

PO Box 30803 AMC

Memphis, TN 38130-0804

If you do not fit in one of the categories listed above, then mail your application to:

Memphis Internal Revenue Service

Category: Taxes

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