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If taxpayers are unable to pay a tax debt in full and an installment agreement is not an option, they may be able to take advantage of an offer in compromise (OIC). Generally, an OIC should be viewed as a last resort after taxpayers have explored all other available payment options. The IRS resolves less than one percent of all balance due accounts through the OIC program.

What is an Offer in Compromise?


An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances. A tax debt can be legally compromised for one of the following reasons:

Doubt as to liability - Doubt exists that the assessed tax is correct.
Doubt as to collectibility - Doubt exists that the taxpayer could ever pay the full amount of tax owed.
Effective Tax Administration - There is no doubt the tax is correct and could be collected but an exceptional circumstance exists that allows the IRS to consider a taxpayer's OIC. To be eligible for a compromise on this basis, the taxpayer must demonstrate that collection of the tax would create an economic hardship or would be unfair and inequitable.

Taxpayers should beware of promoters' claims that tax debts can be settled for "pennies on the dollar" through the offer in compromise program. We can help you determine if you are an “Offer in Compromise” candidate. In order to do this, we would assist you in completing financial forms which the Internal Revenue Service requires to be sent along with Form 656- Offer in Compromise.

Call us at  847-696-0077 and speak to one of our Enrolled Agents today!

 
 
 
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444 N. Northwest Hwy, Suite 195, Park Ridge, IL 60068, 847-696-0077, 312-587-8300
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