CandleFocus Glossary Editor
An Offer in Compromise (OIC) is a method of satisfying one's IRS tax debt by paying less than what is owed. It is the ultimate goal of a taxpayer facing an unpaid tax debt to settle an IRS debt for less than the full balance due.
When considering whether to accept an Offer in Compromise, the IRS focuses on the taxpayer’s ability to pay the tax debt in full. They use the amount offered by the taxpayer to determine if the taxpayer has the financial means to pay the full amount with the time period it is given.
The Offer in Compromise program is not for everyone. To qualify for the program, the taxpayer and their representatives must prove a “doubt as to collectibility”. This means that the IRS must believe that the taxpayer cannot pay the full amount due in the time given. To accomplish this, common criteria that the IRS considers includes a comprehensive review of the taxpayer’s financial situation, including debts, assets, income, living expenses, and other applicable criteria.
If the taxpayer meets the criteria for the program, the IRS will review the offer and make a determination. When the IRS considers an OIC, they will determine the taxpayer’s reasonable collection potential. This means that they will look at the taxpayer’s present and future ability to pay the debt in full, and compare it with the amount that is offered in the OIC.
The Offer in Compromise program is a complex process, and it is best to seek professional assistance from a qualified tax attorney or enrolled agent. The professional will review the facts and prepare a customized approach, tailored to the taxpayer’s specific financial situation, in an effort to provide the best possible outcome through the Offer in Compromise program.
In addition to filing the correct forms, with the correct information and required documentation, the taxpayer must also pay a non-refundable filing fee, as well as the first installment of the offered amount, usually within 21 days of submitting the OIC. The remainder of the debt is then paid according to the payment schedule the taxpayer and IRS agree upon.
The primary advantage of the Offer in Compromise program is that it allows taxpayers to receive the opportunity to settle their tax debt for less than what they owe. The process of qualifying for an OIC, however, is time-consuming and detailed, and should not be undertaken without professional assistance. With the help of a qualified tax professional, taxpayers will be given the best chances at reaching a satisfactory resolution with the IRS.
When considering whether to accept an Offer in Compromise, the IRS focuses on the taxpayer’s ability to pay the tax debt in full. They use the amount offered by the taxpayer to determine if the taxpayer has the financial means to pay the full amount with the time period it is given.
The Offer in Compromise program is not for everyone. To qualify for the program, the taxpayer and their representatives must prove a “doubt as to collectibility”. This means that the IRS must believe that the taxpayer cannot pay the full amount due in the time given. To accomplish this, common criteria that the IRS considers includes a comprehensive review of the taxpayer’s financial situation, including debts, assets, income, living expenses, and other applicable criteria.
If the taxpayer meets the criteria for the program, the IRS will review the offer and make a determination. When the IRS considers an OIC, they will determine the taxpayer’s reasonable collection potential. This means that they will look at the taxpayer’s present and future ability to pay the debt in full, and compare it with the amount that is offered in the OIC.
The Offer in Compromise program is a complex process, and it is best to seek professional assistance from a qualified tax attorney or enrolled agent. The professional will review the facts and prepare a customized approach, tailored to the taxpayer’s specific financial situation, in an effort to provide the best possible outcome through the Offer in Compromise program.
In addition to filing the correct forms, with the correct information and required documentation, the taxpayer must also pay a non-refundable filing fee, as well as the first installment of the offered amount, usually within 21 days of submitting the OIC. The remainder of the debt is then paid according to the payment schedule the taxpayer and IRS agree upon.
The primary advantage of the Offer in Compromise program is that it allows taxpayers to receive the opportunity to settle their tax debt for less than what they owe. The process of qualifying for an OIC, however, is time-consuming and detailed, and should not be undertaken without professional assistance. With the help of a qualified tax professional, taxpayers will be given the best chances at reaching a satisfactory resolution with the IRS.