The Ins and Outs of the Offer in Compromise Program - Is It Right For You?

Many taxpayers are not aware of the Offer-in-Compromise Program, yet it can be a lifesaver in many situations. If you owe the IRS more than you can afford to pay, and you qualify for the Offer-in-Compromise Program, the IRS will determine your situation and settle on a small amount in payment.

What is the Offer in Compromise?

The Offer-in-Compromise (OIC) program’s purpose is to bring taxpayers who are genuinely interested in bringing their taxes up to date and are sincere in their desire to fulfill their obligations. It is an agreement made between a taxpayer and the IRS, which both helps resolve a taxpayers liability and is a resource for taxpayers who either disagree with the amount they owe or believe their taxes have been incorrectly calculated. The IRS may compromise for any of the following reasons:

Questions as to the liability
Doubt as to whether the assessed tax is correct
Uncertaintly as to collectibility

Because the IRS has the authority to settle or compromise, it can accept less than the full payment in some situations. But there must be no doubt that the tax is correct and that collection would create financial hardship. One of the qualifications the IRS takes into consideration is the inability of the taxpayer to ever be able to pay the amount of tax owed. But the minimum amount must be equal to or greater than the taxpayer’s reasonable collection potential. (RCP) It does in fact allow for tax liabilities to be reconsidered.

Allows for some taxpayers to start anew
Allows for back tax liabilities to be settled
Federal tax liens are released

The IRS carefully reviews the taxpayer’s financial situation to determine the taxpayers ability to pay. The IRS also considers the taxpayers equity in assets. If an individual qualifies for the Offer-in-Compromise program, thousands of dollars in taxes, penalties and interest can be saved. In fact, taxpayers can compromise IRS taxes, penalties, interest and payroll taxes. Once the IRS makes a determination, an amount is arranged so the taxpayer can get back on track.
Learn whether you qualify and whether the program is right for you.

Our IRS Offer in Compromise acceptance rate is approaching 90%.

Frequently Asked Questions (FAQ) about OFFERS IN COMPROMISE

1. To be eligible for an Offer in Compromise what must a taxpayer do?

Answer: A taxpayer must first file all returns that are due to be eligible for an Offer in Compromise.

2. Is there a certain time that collection information needs to be completed?

Answer: To start the process, Collection Information Statements are required for doubt as to collectibility and effective tax administration Offer in Compromise, and doubt as to liability involving Trust Fund Recovery Penalty assessments.

3. If a taxpayer qualifies for an installment agreement, can the taxpayer still submit an Offer in Compromise?

Answer: Taxpayers will not be considered for an offer in Compromise if a tax liability can be paid in a lump sum or through an installment agreement. There is one exception. If a taxpayer requests an Offer in Compromise under the effective tax administration program, they might be considered.

4. If the IRS levied a bank account, will the levy proceeds be returned if the taxpayer files an Offer in Compromise?

Answer: Before the Offer in Compromise is submitted, the IRS will keep all payments and credits made, received or applied to the total original tax liability. The IRS may also keep any proceeds from a levy that was served prior to the submission of an Offer in Compromise, but which were not received at the time the Offer in Compromise was submitted

5. Can a taxpayer file an Offer in Compromise as a method of delaying collection?

Answer: As soon as it is determined that an Offer in Compromise had been filed solely to delay collection actions, the IRS will return the offer without further consideration, plus taxpayers will not be afforded any rights to appeal.

6. Can taxes be settled by offering pennies on the dollar?

Answer: The Offer in Compromise must include an amount equal to or greater than the total value of all assets as well as future income. The program is not designed as means for anyone with financial problems and should not be considered as a way to avoid paying taxes.

* Sometimes misspelled as offer in comprimise