Offer In Compromise

offer in compromiseThe Offer in Com­pro­mise (OIC) is con­sid­ered to be the best tax res­o­lu­tion pro­gram offered by the IRS or by any state tax­ing agency. Many tax res­o­lu­tion com­pa­nies adver­tise this pro­gram as “pen­nies to a dol­lar” solu­tion to attract trou­bled tax­pay­ers but there is more than that meets the eye.

Although the OIC is a real pro­gram, it is not as easy as “pen­nies to a dol­lar.” There are cer­tain qual­i­fi­ca­tions before a tax­payer can avail of this pro­gram. There are strict require­ments to fol­low and it is not for every tax­payer who walks in the door who has tax liability.

In gen­eral, an OIC is a writ­ten agree­ment between the IRS and a tax­payer which allows the tax­payer to pay a lesser amount as pay­ment in full of the actual tax lia­bil­ity (tax, penal­ties and inter­ests). For exam­ple: A owes the IRS $25,000 and he offers $1,500 to pay the entire lia­bil­ity. If A meets all the require­ments of the OIC, the IRS will accept the $1,500 as full sat­is­fac­tion of the $25,000 tax liability.

The IRS will con­sider an OIC appli­ca­tion based on fol­low­ing grounds:

  • Doubt as to liability
  • Doubt as to collectivity
  • To pro­mote effec­tive tax administration

The OIC is a com­pli­cated process and no tax res­o­lu­tion com­pany can guar­an­tee a 100% approval. Tax­pay­ers should be wary of the “pen­nies to a dol­lar” promise and the best way to start an OIC appli­ca­tion is to con­sult a tax professional.

We have had suc­cess­fully nego­ti­ated an OIC approval for our clients. We are real­is­tic in our approach and we do not guar­an­tee a spe­cific out­come; but what we can guar­an­tee is that based on our expe­ri­ence and knowl­edge, we have a bet­ter chance to suc­ceed than the other tax res­o­lu­tion com­pa­nies who touts “pen­nies to a dollar.”