Offer In Compromise
Did you know that under certain conditions you may be able to settle your debt with the IRS with their Offer in Compromise (OIC) program? The program allows taxpayers to settle with the IRS on tax debt that has been incorrectly assessed or for liabilities they cannot afford to pay.
If you owe back taxes but cannot pay in full or through the established repayment plan, the IRS has devised programs that can help reduce your total debt so that you can lead a normal life again.
The IRS Code states: "We will accept an Offer in Compromise when it is unlikely that we can collect the full amount owed and the amount you offer reasonably reflects the collection potential..." (Internal Revenue Code section 7122).
The IRS' OIC program allows qualified taxpayers with an unpaid tax debt to negotiate a settled amount that is less than the total owed to clear the debt. The objective of the OIC program is to accept a compromise when acceptance is in the best interests of both the taxpayer and the U.S. government. It also promotes compliance with all future payment and filing requirements.
The IRS will analyze your proposal according to its determination of your "reasonable collection potential." The focus is based on the taxpayer’s ability to pay and not the tax liability outstanding. The purpose of the compromise is to achieve a solution which is beneficial to the taxpayers and the IRS. Your offer must be based on what the IRS considers your true ability to pay.
To determine your reasonable collection potential the IRS considers your amount of your assets, liabilities, income, expenses and future earning potential. Only in special circumstances will the IRS accept an Offer in Compromise if you can pay your debt in full via an installment agreement or a lump sum payment.
Submitting an Offer in Compromise application does not mean that the IRS will accept your offer. There are other alternatives to pursuing an OIC in order to settle a tax assessment, including installment agreements, partial installment agreements, penalty and interest abatement requests.
Request a no cost consultation to discuss possible solutions to your tax problems by completing the form on the bottom of this page.