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What is the IRS Offer in Compromise?

Created to help taxpayers in a true economic hardship, the IRS Offer in Compromise (OIC) is the optimal option for resolving your tax debt, as it generally results in substantial tax savings. Successfully negotiating an Offer in Compromise is life-changing for those who qualify for it. People who settle their tax debt through an Offer in Compromise end up paying a fraction of the total amount they owe to the IRS.

Eligibility for an Offer in Compromise

To be eligible for an Offer in Compromise, the taxpayer is required to validate that collection of the total tax owed would produce an economic suffering or would be unfair and unreasonable. If your financial circumstance makes it practically hopeless for you to pay off your tax debt, even through a long term tax resolution plan such as an Installment Agreement, the IRS may be inclined to agree to an Offer in Compromise, which can significantly reduce, or even eliminate, your tax bill.

How the Offer in Compromise Works:

  • You and the IRS recognize that there’s no reasonable way to satisfy your tax debt. This includes proving that you do not have sufficient income or a substantial amount of profitable assets to pay off your debt
  • You offer to pay the IRS the largest amount that you have the means for, even if that amount is a very small percentage of your total tax bill
  • If the IRS agrees that the amount you suggested is the most that they could legitimately expect to secure from you, they will accept to compromise and decrease your tax liability to equal the amount you offered
  • When you fulfill payment of the determined amount, the tax debt is recognized as settled. This is true even if the amount is only a small fraction of what your initial tax debt

Getting Help with Offer in Compromise

The acceptance rate when submitting an OIC without professional guidance is typically low as a result of errors or omissions on submissions. To have a higher likelihood of acceptance, seek help from a tax resolution professional. Our team of experienced, trusted tax advisors will ask in-depth questions to ensure that this is the best solution for your tax debt. A tax debt can be lawfully endangered for any of the following reasons:

  • Doubt as to Liability – Uncertainty occurs that the evaluated tax is legitimate
  • Doubt as to Collectability – Uncertainty occurs that the taxpayer could ever pay the total tax debt
  • Effective Tax Administration – There is no doubt the tax is legitimate and could be collected, but a rare situation occurs that supports the IRS to examine a taxpayer’s offer

For your highest probability of successfully arranging an Offer in Compromise, you’ll want to partner with a tax resolution expert. Five Stone’s trusted tax attorneys and accountants are highly experienced in preparing, submitting and settling these cases. Call our office today, and we will answer any questions you have and provide you with options to get the best possible outcome.