Taxpayer Solutions, Inc, Tax Return Preparation, Oak Brook, IL

Offer in Compromise

Do you want to settle with the IRS? Well, here is your opportunity. If you qualify, you can settle your tax liabilities for less than the full amount. With some preliminary information we can assess your situation to determine if you qualify for the OIC program. If you don't, we'll explain why and recommend an alternate solution to your tax problem. CONTACT US NOW, WE CAN HELP!

First of all, let us briefly explain how the Offer in Compromise program works. This is an agreement between you and the IRS that satisfies your tax liability. The IRS will accept less than full payment under the following circumstances:

  • Doubt as to Liability - Doubt exists that the assessed tax is correct.
  • Doubt as to Collectibility - Doubt exists that you could ever pay the full amount of tax owed.
  • Effective Tax Administration - There is no doubt the tax is correct and no doubt the amount owed could be collected, but an exceptional circumstance exists. This could be an economic hardship or full payment would be unfair and inequitable.

On Feb. 3, 2004, the IRS issued this notice:

WASHINGTON — The Internal Revenue Service today issued a consumer alert advising taxpayers to beware of promoters’ claims that tax debts can be settled for “pennies on the dollar” through the Offer in Compromise Program.

Some promoters are inappropriately advising indebted taxpayers to file an Offer in Compromise (OIC) application with the IRS. This bad advice costs taxpayers money and time. An Offer In Compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances.

“This program serves an important purpose for a select group of taxpayers. But we are increasingly concerned about unscrupulous promoters charging excessive fees to taxpayers who have no chance of meeting the program’s requirements,” said IRS Commissioner Mark W. Everson. “We urge taxpayers not to be duped by high-priced promises.”

If you qualify for an Offer in Compromise and meet our criteria, our veteran tax professionals will contact the IRS for you. We will then prepare and negotiate your offer in compromise. The negotiations usually center around the proper valuation of your assets, (that's the amount the IRS believes they could collect from a quick sale) and accurate information about your monthly income and living expenses.

Effective 11/01/03 there is a $150.00 application fee payable to the U.S. Treasury for submission of an offer in compromise.

The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), created major changes to the IRS OIC program as it relates to lump-sum offers, periodic payment offers, and a determination as to when an offer is accepted. These changes affect all offers received by the IRS on or after July 16, 2006.

TIPRA, section 509, amends Internal Revenue Code section 7122 by adding a new subsection (c) “Rules for Submission of Offers in Compromise" which establishes the following:

  • A taxpayer filing a lump-sum offer must pay 20 percent of the offer amount with the application (IRC 7122(c)(1)(A)). A lump-sum offer means any offer of payments made in five or fewer installments.
  • A taxpayer filing a periodic-payment offer must pay the first proposed installment payment with the application and pay additional installments while the IRS is evaluating the offer (IRC section 7122(c)(1)(B)). A periodic-payment offer means any offer of payments made in six or more installments.

The IRS considers the 20 percent payment for a lump sum offer, and the installment payment on a periodic payment offer, as "payments on tax" and are not refundable deposits regardless of whether the offer is later returned, withdrawn, rejected or terminated by the IRS.

There are two payment plans that the IRS may agree to:

  1. Cash (paid in five or fewer payments)
  2. Periodic Payment (up to 24 months)

During the time that the IRS is reviewing your offer, they will withhold collection activities:

  1. While they investigate and evaluate the offer.
  2. For 30 days after they reject an offer.
  3. While we appeal an offer rejection.

It doesn't matter where you live; we can represent you. Because of the increased volume of Offers that are currently being filed with the IRS, the entire OIC process may take from six months to one year. During the process, the IRS may require additional information and will allow only a short period of time for us to respond.

This is a complex process to handle if you're never done it before. Although you can do it on your own, we don't recommend it. Our expertise and experience in dealing and negotiating with the IRS can make this process much more successful for you. Together we can succeed.


Copyright 2001-2023 Taxpayer Solutions, Inc.