Do you owe the IRS $10,000 or more ???

The Offer in Compromise (AKA “OIC”) program, is an Internal Revenue Service (IRS) program that allows someone who owes Federal taxes to negotiate a settlement that is less than the total debt owed. The objective of the OIC program is to accept a compromise when acceptance is in the best interests of both the government and the qualified taxpayer and promotes voluntary compliance with all future payment and filing requirements.

There are strict qualification requirements for an OIC and not everyone who owes thousands of dollars to the IRS will qualify for the program. Refer to our “Avoid Scam” section to make sure you stay away from fraudulent companies that promise you an Offer in Compromise, without first analyzing your specific tax situation, and preparing the necessary forms for the IRS, since the IRS is the only one that can approve an OIC.

IRS Tighten the rules of “Offer in Compromise”

Beginning with Offer applications received on or after March 27, 2017: The IRS will return any newly filed Offer in Compromise application if you have not filed all required tax returns

There are many factors to think about before attempting to settle with the IRS, it requires an understanding of how to navigate through IRS settlement guidelines that often have no fairness or reason. Our Tax Professionals will investigate and explore all the options for you.

An Offer in Compromise can help you reduce your tax debt to a fraction of what you originally owed, and it is a great option, if you qualify.

If you qualify for an OIC, our Tax Professionals can settle your IRS debt for 10% or less of what you owe. You can also explore the “Expanded Installment Agreement” options if you don’t qualify for an Offer in Compromise.

Please make no mistake, an Offer in Compromise can be a great way to rid yourself for good of the IRS. However, you need to know everything about “the bad” to make sure that an OIC is the right program for you.

IRS Offer in Compromise. The Good:

• Offer in Compromise is a fresh start from heavy tax debt, if you qualify.
• Your wages and/or bank accounts are no longer at risk of being garnished by the IRS.
• Credit score improvement – after an Offer in Compromise is complete, the IRS will release all tax liens filed against you.
• The IRS will put all collection actions on hold while the compromise is investigated.

Good to know before applying:

A comprehensive investigation by the IRS is required. They will investigate your finances before settling, you must disclose your income, expenses and assets including your house, cars, valuables and retirement accounts.The IRS will consider your unique set of facts and circumstances including your ability to pay, your income, expenses, and asset equity.

• The IRS will require the information about your current employment including the review of your paystubs, tax returns, bank statements, business profits and losses.
• While an Offer in Compromise is being investigated, the IRS clock to legally collect from you (10 years) stops running. In that regard, it can be a bad idea to try to settle when there are only a few years remaining for the IRS to collect.
• If the offer is accepted by the IRS, you will be put on a five-year probation, requiring full compliance in filing and payment of all taxes during that time.

IRS Offer in Compromise. The Bad:

• An Offer in Compromise can take the IRS from 9-12 months to investigate. The IRS then allows for a 5-24 month period to pay the settlement amount to the IRS.
• It is harder to get qualified for an OIC if you are making credit card payments, or have a high monthly mortgage or car loan payment. The IRS may consider those payments in their settlement calculations.
• If the IRS determines they can collect the full amount you owe, your offer will be rejected.
• The IRS rejected 60% of the offers it received in 2016, consisting of 41,000 rejections out of 68,000 submissions.

Please keep in mind that there are other options – a compromise is not the only way to clear an IRS tax debt out of your life. The IRS can accept the fact that you owe the tax debt but not force you to repay it. This practice is also known as “currently uncollectible” debt, where the IRS puts you in their bad debt category and then leaves you alone. The IRS has 10 years to collect taxes – sometimes it makes more sense to let this timeframe expire rather than compromising.

Knowing about all aspects of an IRS Offer in Compromise as well as your other options helps you make the right decision to move forward in way that is in your best interests.

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