Offer in Compromise

An IRS Offer in Compromise allows you to settle your tax debt for less than what you owe. It may be a good option if you cannot pay the full amount or if doing so would create a legitimate financial hardship.

Generally, an Offer in Compromise is approved when the amount offered (Form 656) represents the most the IRS can expect to collect within a reasonable period of time. I am able to evaluate your potential offer when you complete a financial analysis using Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses).

There are three Offer in Compromise programs:

  1. Doubt as to Collectibility
  2. Doubt as to Liability
  3. Exceptional Circumstances (Effective Tax Administration)

In order to qualify for any of these programs, you must be current with your tax filings and you cannot be in a pending bankruptcy.

The OIC programs have different payment options:

Lump Sum Cash

You submit an initial payment of 20 percent of the total offer amount with your application. After you have received acceptance of your offer from the IRS, you pay the remaining balance in five or fewer payments.

Periodic Payment

You submit your initial payment with your application and then continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, you continue to pay monthly until your offer is paid in full.

Low Income Certification

If you meet the guidelines for this program, you do not have to send the $150 application fee or the initial 20 percent payment. You will also not need to make monthly installments during the evaluation of your offer.

While your offer is being evaluated by the IRS, some actions are paused while others can continue. For example, a Notice of Federal Tax Lien may still be filed during the evaluation period. To learn more about the IRS Offers in Compromise program and to determine whether you qualify, contact me for a free phone consultation.

Please tell me if I qualify for the Offer in Compromise program.