Offer in Compromise: Settle Back Taxes for Less through an OIC

An Offer in Compromise, or OIC, is an agreement by the IRS with a taxpayer to settle IRS tax debt for less than the actual amount owed. An IRS Offer in Compromise is commonly known as the "pennies on the dollar" deal. However, it's important to note that only a small percentage of taxpayers actually qualify for an Offer in Compromise. That's right. You must qualify for an OIC. You are not automatically given an Offer in Compromise to settle your back taxes just because you asked for it.

Offer in Compromise: Who Qualifies?

• Doubt as to Collectibility: Can you show that it is unlikely that your entire tax debt amount will be paid in full before the statute of limitations ends? For example, are you living paycheck to paycheck with no disposable income after covering your basic necessities? Do you not have any assets to sell that could be applied towards your tax debt?
• Doubt as to Liability: Can you prove that the tax debt itself is incorrect or unjust? For example, if you were audited but the examiner made a mistake interpreting the law and assessed an incorrect tax debt amount, you would be eligible for an OIC.
• Effective Tax Administration: Do you admit the tax debt amount is correct and justified, but paying it off in either a lump sum or monthly payment plan would cause financial hardship? Note that financial hardship is not the same thing as an inconvenience. In order to be accepted for an IRS Offer in Compromise, you must prove that paying your back tax debt would affect your ability to pay for housing, groceries, and other basic necessities.

Filing for an Offer in Compromise? Start Here!	What is Your Total Tax Debt? ->    $800,000 +    $400,000 to $799,999    $200,000 to $399,999    $100,000 to $199,999    $90,000 to $99,999    $80,000 to $89,999    $70,000 to $79,999    $60,000 to $69,999    $50,000 to $59,999    $40,000 to $49,999    $30,000 to $39,999    $20,000 to $29,999    $10,000 to $19,999    $0 to $9,999

Applying for an Offer in Compromise

Updates to the Offer in Compromise Program

• Taxpayers with an annual income of $100,000 or less can apply.
• Tax debt amounts of $50,000 or less are eligible. The previous maximum was $25,000.

Be clear that this does not mean that being accepted for an IRS Offer in Compromise is easier. This only means that more taxpayers are eligible; the Doubt as to Collectibility, Doubt as to Liability, and Effective Tax Administration detailed above still stand.

Expert Tax Help When Applying for an Offer in Compromise

If you're considering applying for an Offer in Compromise, contact IRS-Tax-Settlement-HQ.com today for a free consultation with a tax debt analyst. Through a free consultation, we'll match you with a B rated team or higher by the Better Business Bureau that will help you determine if an IRS Offer in Compromise is the best solution to help you settle back taxes.