Offer in Compromise / IRS Tax Debt Settlement

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There were approximately 56,000 Offers in Compromise filed in 2011 on back taxes. Only 12,000 of those filed were accepted. A professional tax company has a much better chance of getting Offers in Compromise accepted because they understand the guidelines the Internal Revenue Service has set forth. The filing of an Offer in Compromise and back taxes is much more than filling out the paperwork and submitting it to the IRS. Our experience staff has former IRS agents who have worked the Offer in Compromise (OIC) program while at the IRS. They have the knowledge necessary to get Offers in Compromise through the system if you qualify for the program. Before an Offer in Compromise is filed, all the facts need to be reviewed. Before you spend any money or waste your time, let our staff walk you through the process. We have been processing Offers in Compromise for 60 years.

We will provide straightforward answers to questions about an Offer in Compromise.

• Does an Offer in Compromise apply to me?
• How much can I settle my tax debt for with the IRS?
• What are my Offer in Compromise payment options?
• What factors affect the settlement outcome with an Offer in Compromise?

The Three Programs for Offers in Compromise

In general, a taxpayer must submit a $150 application fee and an initial payment along with the Form 656 Offer in Compromise. Taxpayers may chose to pay their Offer in Compromise in one of three payment options:

1. Lump Sum Cash Offer – Payable in non-refundable installments, the offer amount must be paid in five or fewer monthly installments upon written notice of acceptance. A non-refundable payment of 20 percent of the offer amount along with the $150 application fee is due upon filing the Form 656. The offer amount must include the realizable value of assets plus the amount that could be collected over 48 months of payments or the time remaining on the statute, whichever is less.
2. Short Term Periodic Payment Offer – Payable in non-refundable installments. The offer amount must be paid within 24 months of the date the IRS received the offer. The first payment and the $150 application fee are due upon filing the Form 656. Regular payments must be made during the offer investigation. The offer amount must include the realizable value of assets plus the total amount the IRS could collect over 60 months of payments or the remainder of the statutory period for collection, whichever is less.
3. Deferred Periodic Payment Offer – Payable in non-refundable installments. The offer amount must be paid over the remaining statutory period for collecting the tax. The first payment and the $150 application fee are due upon filing the Form 656. Regular payments must be made during the investigation. The offer amount must include the realizable value of assets plus the total amount the IRS could collect through monthly payments during the remaining life of the statutory period for collection.

The IRS is not bound by either the offer amount or the terms proposed by the taxpayer. The OIC investigator may negotiate a different offer amount and terms, when appropriate. The investigator may determine that the proposed offer amount is too low or the payment terms are too protracted to recommend acceptance.

Am I Eligible For An Offer In Compromise?

Important items to know about an Offer in Compromise:

• You must be compliant for two consecutive quarters (six months) before an offer can be submitted.
• The advantage of an OIC is that the amount you pay is considerably less than what is actually owed. All principal and interest stops accruing and most of the time enforced collection is suspended.
• One of the rules for the OIC is that you must remain current and compliant for five years after acceptance.

Questions on Offer in Compromise – Feel free to email us a question!

If IRS filed a substitute tax return for you, we can help!