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Tax Hardships Alleviated with Offer in Compromise

If you are experiencing financial hardship or unforeseen circumstances that limit your ability to pay the taxes you owe, or if you believe the amount of taxes the government claims you are liable for is incorrect, you may be eligible for an IRS offer in compromise.

An offer in compromise, or OIC, is an agreement between the Internal Revenue Service (IRS) and a taxpayer that allows the taxpayer to settle his or her tax liability for only a portion of the total amount owed.

The IRS allows OIC agreements for one of three reasons:

  • Doubt as to Collectability- the amount owed is correct but there is substantial doubt a taxpayer would ever be able to pay the full amount of taxes owed within the mandated collection timeline
  • Exceptional Circumstances or Effective Tax Administration- the amount owed is correct but exceptional circumstances, such as a serious illness, prevents payment without extreme economic hardship, or collection would otherwise be very inequitable or unfair
  • Doubt as to Liability- there is doubt that the amount of taxes owed is correct, the tax examiner may have misinterpreted the law or there may be evidence the examiner did not previously consider when assessing tax liability

The OIC application fee is $150. Payment options for OIC agreements consist of non-refundable installments ranging in length. The agreements are always subject to change if an OIC investigator determines payments are too low or the payment terms too extended. Missing an installment can void the agreement.

Since an OIC is difficult to obtain the assistance of a knowledgeable tax debt attorney can be very valuable. If you think you may be eligible for an OIC contact an experienced attorney who can guide you through the process.

Source: What is an Offer in Compromise?

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