| Offer in Compromise
What is an Offer in Compromise? If you are unable to pay a tax debt in full, and an installment agreement is not an option, then you may be able to take advantage of the Offer in Compromise (OIC) program. Generally, the OIC program should be viewed as a last resort, after taxpayers have explored all other available payment options.
An Offer In Compromise is an agreement between yourself and the IRS or State that resolves your tax debt for less than the amount owed. A tax debt can be legally compromised for one of the following reasons:
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 that the amount owed could be collected, but an exceptional circumstance exists that allows the IRS to consider a taxpayer's OIC.
You can compromise all types of taxes, penalties, and interest. Even payroll taxes can be compromised. The IRS accepts approximately 25% of all offers filed. If Total Tax Solutions can show that you qualify for this program, you can save thousands of dollars in taxes, penalties and interest.
Things to keep in mind:
- You must be compliant for two consecutive quarters (6 months) before an offer can be submitted.
- The advantage of and OIC is that the amount paid is considerably less than what is actually owed, all principal and interest stops accruing and enforced collection is suspended.
- The disadvantage of an OIC is that you must remain current and compliant for 5 years after acceptance, and it's a lot of paperwork.
Most people do not have the skills or knowledge of the IRS collection process to make an Offer In Compromise that is in their best interest. Many people fill out the forms incorrectly, overstate their assets and income, and offer too much. Government figures show that 75% of Offers are returned at the beginning due to forms being filled out incorrectly; and of the 25% that are processed, approximately 50% of them are rejected.
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