IRS Offer in Compromise: A Tax Settlement Options

2007-03-08 10:33:40

( Legal )



An IRS offer in compromise (OIC) gives you the opportunity to lower the tax amount that you owe. In order for the IRS to accept your application for an offer in compromise, you must prove that you have no means of paying the amount of tax that is due in full, or in the form of installments, and that you have exhausted all other payment options.

If you owe the IRS any taxes, it can be legally compromised or waived if there is any form of doubt on the amount of tax that is owed, or that there is any doubt that you will ever be able to pay for your taxes in full.

In order for your application for an offer in compromise to be reviewed by the IRS, you will need to pay an application fee (except in cases when you are filing because of a doubtful amount, or because your income falls below the poverty level).

When you have filed for an IRS offer in compromise, the statute of limitations will allow for the suspension of the collection of taxes until such a time that the IRS sends you a notice of acceptance or rejection.

In the event of a rejection, you can file for an appeal, at which time, the period of suspension for collection will still remain in effect until another notice of acceptance or rejection is released.

Once the IRS offer in compromise is accepted, you must pay for the tax amount within a certain period of time. Failure to complete your payments will result in a default, and in the reinstatement of the original tax amount.

There are different ways you can pay an IRS offer in compromise:

You can pay in cash within 10, 30, 60 or 90 days of the date of acceptance of the offer in compromise.

A short-term deferred payment plan gives you the opportunity to make a down payment or deposit within 90 days; the balance is then paid in equal monthly installments within the period of two years.

A deferred payment plan requires you to pay the entire tax amount within the remainder of the statutory period prescribed by the IRS for collecting tax, which is normally 10 years.

If you need further assistance regarding an IRS offer in compromise, it is best that you either approach the IRS, or seek the help of a tax consultant or tax lawyer who can provide you further advice on your situation.


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