Offer in Compromise

If you are unable to pay your tax debt in full, you may qualify to have your debt settled for less than the full amount owed. At Tax Advocate, our Offer in Compromise attorneys perform this type of negotiation often. We would submit an offer to the IRS, showing that you have exhausted all other payment options or that your tax liability is incorrect.

In some cases, your financial situation may make it difficult for you to pay off all your tax debt, even when taking advantage of tax resolution over the long term via an installment plan. In such a scenario the IRS may be willing to accept an “Offer in Compromise” and significantly lower your tax bill.

The Offer in Compromise may be a life-saving form of tax resolution for those who truly need it.

• Both you and the IRS acknowledge that there is no feasible way to pay off all your tax debt. This means that you do not have enough income to pay off your debt and do not have enough valuable assets that the IRS could seize.
• You offer to pay the IRS the maximum amount that you can afford, even though that amount may fall far short of the actual tax debt.
• If the IRS accepts that the amount you offer to pay is the most that they could reasonably expect to collect from you, they will agree to compromise and essentially lower your tax debt to match the amount you can pay.
• Once you have finished paying the agreed-upon amount, the tax debt is considered “paid in full.” This is true even if the agreed-upon Offer in Compromise is only a small percentage of what you originally owed.

The Right to Pay No More than the Correct Amount of Tax

Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly. 

The acceptance rate on OIC’s is fairly low due to errors or omissions on submissions. In order to have a better chance of approval, one should utilize professional assistance for this complex process. Our highly qualified and experienced Offer in Compromise attorneys will work very hard to see if this is the best solution for your IRS tax debt. 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 Collectability – Doubt exists that the taxpayer could ever pay the full amount of tax owed.
• Effective Tax Administration – There is no doubt the tax is correct and could be collected but an exceptional circumstance exists that allows the IRS to consider a taxpayer’s OIC.