IRS OFFER IN COMPROMISE
What is an IRS Offer in Compromise?
- An OIC is an agreement between a taxpayer and the IRS that settles the debt for less than the full amount owed. The IRS will not accept and OIC unless the amount offers is greater than the amount that can be realized from the taxpayer’s assets and anticipated future income.
- Payment options—Lump sum—the amount must be paid in five or fewer installments. Short-term Payment Offer—the amount must be paid within 24 months. Deferred Periodic Payment Offer—the amount must be paid over the remaining statutory period. The amount to be paid under options will be more the longer you take to pay.
- Payments and application fees are paid separately. The initial payment is 20% of the amount offered. The Application fee is $150. Neither one is refundable if the offer is rejected or withdrawn.
Final considerations
Less than 1% of the clients we meet qualify to do an offer or comply with OIC requirements. If you are part of that 1%, we will get you an Offer in Compromise.
Here are the reasons why successful offers are rare:
- 50% make too much money.
- 50% spend too much on rent/mortgages and/or their auto expenses.
- 50% can not afford to pay the OIC amount they qualify for.
- 25% can not afford the 20% down payment.
- 20% can not come up with the money after the offer is accepted.
- 20% fail to file and pay their current year taxes.
- 20% fail to comply with filing and paying their taxes for the next five years.