Offer in Compromise
Here’s what the IRS says: “An Offer in Compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed. If the liabilities can be fully paid through an installment agreement or other means, the taxpayer will in most cases not be eligible for an OIC.”
There are three types of the Offer in Compromise:
- Doubt as to Collectibility. The taxpayer has tax debt and an inability to pay.
- Doubt as to Liability. The taxpayer has tax debt and a legitimate reason for not paying.
- Effective Tax Administration. The taxpayer has tax debt and possible ability to pay. But to do so would cause extreme financial distress.
The Offer in Compromise program allows taxpayers to settle their tax bill by demonstrating that they can only afford a certain amount. This is the most favorable of the settlement options. However, national statistics show that only about 24%-32% of the submitted offers get accepted nationwide depending on when you pull the statistics. If you can qualify, we will attempt to resolve your tax issue under this program. We do not want to submit an offer that is rejected on its face. We conduct an analysis of a Clients’ assets and future income potential to put together an OIC that gets accepted. The Client must offer at least the sum of assets and future income to have the best shot at acceptance. The IRS will search for your assets through public records. If they find assets that aren’t listed on the forms submitted with our request, the IRS will want to know why that was omitted. Deal killer.
Essentially, the IRS tries to have you pay what you can afford. Afford, being the operative word here. Our goal is to demonstrate how you CANNOT AFFORD to pay the bill.