Understanding the Costs of an Offer in Compromise: Accountants vs. Attorneys

Navigating the complexities of tax debt can be daunting, and considering an Offer in Compromise (OIC) may be a viable option for resolving your tax obligations. While both accountants and attorneys can assist with the OIC process, their fees and services may differ. This comprehensive guide will delve into the costs associated with hiring an accountant or attorney for an OIC, providing you with the information you need to make an informed decision.

Accountants: A Cost-Effective Option for Streamlined Cases

Accountants typically charge lower fees than attorneys for OIC preparation and submission. Their expertise lies in financial analysis and tax code interpretation, making them a suitable choice for straightforward cases where the taxpayer’s financial situation is relatively uncomplicated.

Services Provided by Accountants:

Reviewing financial records to determine eligibility for OIC
Preparing and submitting the OIC application
Negotiating with the IRS on the taxpayer’s behalf
Providing ongoing support throughout the OIC process

Fee Structure:

Accountants generally charge a flat fee for their OIC services, which may range from $2,500 to $4,000. This fee typically covers all aspects of the OIC process, from initial consultation to final submission.

Attorneys: Comprehensive Support for Complex Cases

Attorneys offer a more comprehensive range of services for OIC preparation and representation. Their legal expertise enables them to handle complex cases involving substantial tax debts, multiple tax agencies, or legal challenges.

Services Provided by Attorneys:

Evaluating the taxpayer’s overall financial situation and legal options
Preparing and submitting the OIC application
Negotiating with the IRS on the taxpayer’s behalf
Representing the taxpayer in court if necessary
Providing ongoing legal advice and support throughout the OIC process

Fee Structure:

Attorneys typically charge an hourly rate for their OIC services, which can range from $200 to $450 per hour. The total cost will depend on the complexity of the case and the number of hours required to complete the process.

Factors Influencing the Cost of an OIC

Several factors can influence the cost of an OIC, regardless of whether you choose an accountant or an attorney:

Complexity of the Case: Cases involving substantial tax debts, multiple tax agencies, or legal challenges will require more time and effort, resulting in higher fees.
Taxpayer’s Financial Situation: The complexity of the taxpayer’s financial situation can also impact the cost. Accountants may charge additional fees for analyzing complex financial records or preparing financial statements.
Hourly Rate or Flat Fee: Accountants typically charge a flat fee, while attorneys charge an hourly rate. The hourly rate will vary depending on the attorney’s experience and reputation.
Negotiation and Representation: If the IRS rejects the initial OIC offer, additional fees may be incurred for negotiation and representation services.

Choosing the Right Professional for Your OIC

The choice between an accountant and an attorney for OIC preparation and representation depends on the specific circumstances of your case.

Consider an Accountant if:

Your case is relatively straightforward with no major legal complexities.
You have a limited budget and are looking for a cost-effective option.
You are comfortable with the accountant’s level of expertise and experience.

Consider an Attorney if:

Your case is complex and involves substantial tax debts or legal challenges.
You need comprehensive legal advice and representation throughout the OIC process.
You are willing to pay higher fees for the attorney’s expertise and experience.

Additional Tips for Minimizing OIC Costs

Gather your financial records: Having all necessary financial documents organized and readily available can streamline the OIC process and reduce the time required for preparation.
Be prepared to negotiate: The IRS may not accept your initial OIC offer, so be prepared to negotiate and provide additional documentation to support your request.
Consider a payment plan: If you cannot afford to pay the OIC fees upfront, inquire about payment plan options offered by the accountant or attorney.
Seek free or low-cost assistance: Explore resources such as the IRS Taxpayer Advocate Service or legal aid organizations that may provide free or low-cost assistance with OIC preparation.

Understanding the costs associated with hiring an accountant or attorney for an OIC is crucial for making an informed decision. Accountants offer a cost-effective option for straightforward cases, while attorneys provide comprehensive support for complex cases. By carefully considering the factors influencing the cost and choosing the right professional for your specific needs, you can navigate the OIC process effectively and resolve your tax debt in a manageable way.

Offer In Compromise – How much to Charge for an OIC

FAQ

How much does it cost to do an offer in compromise?

You’ll have to pay an application fee of $205 and make offer payments (based on the method you choose) with your offer submission, unless you meet certain low-income guidelines, which are in the IRS OIC Booklet.

What is a reasonable offer for offer in compromise?

We generally approve an offer in compromise when the amount you offer represents the most we can expect to collect within a reasonable period of time. Explore all other payment options before you submit an offer in compromise.

How much will the IRS usually settle for?

How much will the IRS settle for? The IRS will often settle for what it deems you can feasibly pay. To determine this, the agency will take into account your assets (home, car, etc.), your income, your monthly expenses (rent, utilities, child care, etc.), your savings, and more.

Can a CPA do an offer in compromise?

With the help of a certified public accountant, your road to financial relief could only be a phone call away. You can settle your debt with the Internal Revenue Service for just pennies on the dollar with an Offer in Compromise Program.

How much does it cost to get an offer in compromise?

$205 application fee (nonrefundable). Initial payment (nonrefundable) for each Form 656. Documentation for Form 433-A (OIC) will include things like bank statements and pay stubs, Allec says. This is what the IRS will use to do the math and check your assets as well as calculate your offer in compromise amount.

How do I get an IRS offer in compromise?

An application for an IRS offer in compromise has three parts: Completed IRS forms 433-A and 656. If you believe the tax debt isn’t yours or doesn’t actually exist, you can also file Form 656-L. A $205 application fee, which is nonrefundable, but may be waived if you meet the IRS low-income guidelines.

What is an offer in compromise (OIC)?

When taxpayers can’t pay their tax bill with their assets and monthly income, they may qualify for an offer in compromise (OIC). The OIC for “doubt as to collectibility” is for people who probably won’t be able to pay the IRS before their collection statute expires (generally 10 years from the date the IRS assesses the tax).

How do I make an offer in compromise?

Some of these will have lower fees and can be easier and faster to obtain. Before submitting an application, use the IRS Offer in Compromise Pre-Qualifier Tool to see if you may be eligible to make an offer. This tool is only a guide. You can still discuss questions you have about filing an offer by contacting the IRS.