Offer-In-Compromise

Disclaimer: The following Offer-In-Compromise material is intended for general information only and not legal or tax advice.

Source: IRS

IRS Offer-In-Compromise
An Offer-In-Compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you cannot pay your full tax liability or doing so creates a financial hardship. We consider your unique set of facts and circumstances:

• Ability to pay;
• Income;
• Expenses; and,
• Asset equity.

The IRS generally approves an Offer-In-Compromise when the amount offered represents the most we can expect to collect within a reasonable period of time. Explore all other payment options before submitting an offer-in-compromise. The Offer-In-Compromise program is not for everyone. If you hire a tax professional to help you file an offer, be sure to check his or her qualifications.

Make Sure You Are Eligible For Offer-In-Compromise
The IRS will return any newly filed Offer-In-Compromise (OIC) application if you have not filed all required tax returns and have not made any required estimated payments. Any application fee included with the Offer-In-Compromise will also be returned. Any initial payment required with the returned application will be applied to reduce your balance due. This policy does not apply to current year tax returns if there is a valid extension on file.

You are not eligible for an Offer-In-Compormise if you are in an open bankruptcy proceeding. Use the IRS’s Website to confirm your eligibility and prepare a preliminary proposal.

Submit Your Offer-In-Compromise Application
Find forms for submitting an application and step-by-step instructions in Form 656 Booklet. Your completed offer package will include:

• Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms;
• Form 656(s) – individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656;
• $205 application fee (non-refundable); and
• Initial payment (non-refundable) for each Form 656.

Select A Payment Option
Your initial payment will vary based on your offer and the payment option you choose:

• Lump Sum Cash: Submit an initial payment of 20 percent of the total offer amount with your application. If your offer is accepted, you will receive written confirmation. Any remaining balance due on the offer is paid in five or fewer payments.
• Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.

If you meet the Low-Income Certification guidelines, you do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer. See your application package for details.

Understand The Process of Offer-In-Compromise
While your offer is being evaluated:

• Your non-refundable payments and fees will be applied to the tax liability (you may designate payments to a specific tax year and tax debt);
• A Notice of Federal Tax Lien may be filed;
• Other collection activities are suspended;
• The legal assessment and collection period is extended;
• Make all required payments associated with your offer;
• You are not required to make payments on an existing installment agreement; and
• Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date.

Let our expert skill help with your Tax Debt Resolution
Zaher Fallahi, Tax Attorney, CPA, extensive experience in IRS Offer-In-Compromise (OIC), advises clients nationwide with OIC, Non-Filed Tax Returns (Back Taxes), Crypto Tax, Including Stolen Crypto, Offshore Accounts, Foreign Gift Tax and Foreign Inheritance Tax.

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