As a tax professional, providing your clients with the most effective tax resolution strategies is vital to your practice’s success. Two powerful options often considered in this context are the Partial Payment Installment Agreement (PPIA) and Offer in Compromise (OIC). In this comprehensive article, we will delve into the intricacies of the partial payment installment agreement vs offer in compromise debate, comparing their benefits, eligibility criteria, and implementation processes. By gaining a thorough understanding of these distinct strategies, you can make informed recommendations to your clients and help them achieve the most favorable outcome in their tax resolution journey, further solidifying your reputation as a knowledgeable and reliable tax expert.
Both Offer in Compromise (OIC) or a Partial Payment Installment Agreement (PPIA) for clients with tax liabilities are viable options, but before you advise your clients, it’s important to know the pros and cons.
Let’s begin by discussing what at face value appears to be the best choice, an OIC. As you’ll see when you read on, this is not always the case.
Pros And Cons Of An OIC
An Offer in Compromise seems to be a piece of cake. Its biggest advantage is that when it’s done, it’s done. One agreement is made with the IRS and then the entire issue goes away, along with a huge amount of your client’s stress.
If your client qualifies, the total amount paid could be pennies on the dollar. Now that’s attractive. A no-brainer, right?
Not always.
Your client needs to know that as good as this sounds, there are also disadvantages, and they can be serious. In fact, the cons can be significant enough to repel some people and lead them to work toward a PPIA instead.
An OIC’s results depend exclusively on a taxpayer’s reasonable collection potential. It’s also very time consuming. The OIC process could take several years, and if the numbers don’t work out, after all your work, the IRS will reject your offer. Finally, an OIC requires extensive paperwork.
Pros And Cons Of a PPIA
The biggest difference between an OIC and a PPIA is that a PPIA is not final. It hangs over a qualifying taxpayer’s head like a dark cloud for years. The IRS requires taxpayers to re-qualify every two years.
There are usually higher monthly payments biannually, and they continue until the collection statute of limitations expires. An IRS Partial Payment Installment Agreement keeps the taxpayer under the agency’s watchful eye for years.
Which is Easier to Qualify?
A PPIA is easier to qualify than an OIC, because the agent-in-charge has more latitude. He or she can use more discretion. The process could only take a few months from beginning to end, and although there is paperwork involved in both cases, there is much less required for a PPIA.
Back to our first question, do know when to ask for a PPIA? Should it be your first go-to or is it best to use it as a fallback when the IRS refuses an OIC?
This is no easy decision. It’s your job to know what to do for whom, and when. The wrong decision can be costly. Your clients should never take on the IRS alone. Be educated and prepared so when they come to you, you can take this burden off their shoulders and offer the relief they need.
How IRS Solutions Helps Determine a Partial Payment Installment Agreement vs Offer in Compromise
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