Offer In Compromise

If you owe a tax debt that you cannot afford to pay, you may be able to reduce the amount you have to pay through an IRS offer in compromise.

What Is An Offer In Compromise?

The IRS offer in compromise is an option that allows you to eliminate your tax bill while paying less than what you owe. To utilize this program, you must meet specific requirements established by the IRS. You must also make an offer that the IRS finds acceptable.

This program has two different payment options: periodic payment and lump sum payment.

  • If you choose periodic payments, you will make equal payments each month until the balance is paid in full.
  • If you choose the lump sum option, on the other hand, you will pay 20 percent of the entire offer amount when you submit the application and the remainder after offer acceptance.

How To Qualify For An Offer In Compromise

To qualify for the offer in the compromise program, you must show that you cannot cover the total amount of tax you owe or that paying your entire bill would create a legitimate financial hardship. The IRS will determine whether you meet these requirements by analyzing your assets, liabilities, income, expenses, and overall ability to repay the debt.

Offer in compromise applicants must also be current with all IRS filing requirements. If you have not filed all of the required tax returns, the IRS will return your application and all accompanying fees. You are not eligible to submit an offer in compromise if there is an open bankruptcy case.

To request an offer in compromise, you must complete a few forms, including Form 656-B, which includes Form 433-A and 433-B. Form 433-A is for individual applicants, while Form 433-B is for businesses. Most applicants must also submit an application fee and an initial payment, which are non-refundable. The initial payment amount will depend on the payment structure you are proposing in your offer. If you have chosen the periodic payment option, you should also make regular payments while the IRS considers your request.

Keep in mind that not every person who applies for an offer in compromise will have a requirement to submit an application fee or an initial payment. If you meet the IRS’ Low-Income Certification Guidelines, you can submit your offer without either of these fees. Applicants who meet these guidelines are exempt from making periodic payments before offer approval.

How Will I Know if My Offer In Compromise (OIC) is Accepted?

After receiving and reviewing your application, the IRS will typically send a decision back to you in writing. If the IRS does not respond to the offer within two years of receiving it, it automatically accepts it.

In general, the IRS will approve an offer in compromise if the amount you have offered is equal to or greater than the amount the IRS expects to be able to collect from you within a reasonable amount of time.

What Happens After My OIC Acceptance?

After your offer acceptance, you must meet all the terms in the offer. If you receive a tax refund during the calendar year the IRS accepts your offer, it will be applied to your outstanding tax debt.

Once all of the terms of your offer have been satisfied, any federal tax liens related to the debt will be released.

What Can I Do If There Is An Offer Rejection?

If there is a rejection of your offer in compromise by the IRS, you can appeal the decision by submitting Form 13711 (Request for Appeal of Offer in Compromise) within 30 days.

Tips For Obtaining An Acceptable Offer in Compromise

To give the best possible chance of offer acceptance by the IRS, follow these tips:

  • Make sure you qualify. The IRS has several requirements you must meet before applying for an offer in compromise. Make sure you meet all of these requirements before you waste your time and money completing and submitting a request.
  • Understand how the IRS analyzes cash flow. Even if you think that your expenses make it impossible for you to repay your tax debt, the IRS may disagree. The IRS has specific guidelines that it uses to analyze your tax flow. These guidelines outlined in the tax code must be followed to calculate your offer amount.
  • Seek professional help. Making an offer in compromise that the IRS is willing to accept can be difficult. To ensure that you aren’t spending time and money unnecessarily and that you don’t pay the IRS any more than you need to, consider consulting an Enrolled Agent, such as the team at Peace Of Mind Tax Help, who have experience with this program.

Peace Of Mind Tax Help Tax Offer In Compromise Representation

One of your most important rights as a taxpayer is your right to have a qualified tax resolution professional, such as an Enrolled Agent (EA), represent you in front of the IRS and/or States and provide tax resolution for your offer in compromise (OIC).

When you hire Peace Of Mind Tax Help to assist you with your OIC offer, we will guide you through the process while advocating on your behalf and protecting your interests.

Peace Of Mind Tax Help is here to help you because when you’re dealing with an IRS tax liability, the worst thing you can do is do nothing at all. The best decision is to take the necessary first step and address your tax liability now!

Click on the “Get Peace Of Mind” button at the top of the page to take that first step.