IRS Tax Relief - Offer in Compromise (OIC) Overview

Taxpayers who need IRS tax relief and are unable to pay a tax debt in full and when an installment agreement is not an option, they may be able to take advantage of an Offer in Compromise (OIC). Generally, an Offer in Compromise should be viewed as the ultimate in IRS settlement programs after taxpayers have explored all other available payment options. 

Per the 2016 IRS statistics, the IRS approved 42% of the 
Offer in Compromise applications that were submitted.

THE IRS TAX RELIEF TEAM AT 
FLAT FEE TAX SERVICE, INC. HAS A 
95% IRS SETTLEMENT APPROVAL RATE.

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What is an Offer in Compromise?

An Offer in Compromise is an agreement between a financially struggling taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances. 

IRS Tax Relief - Offer in Compromise

An IRS tax debt can be legally compromised for one of the following reasons:
  1. Doubt as to liability - Doubt exists that the assessed tax is correct.
  2. Doubt as to collectibility - Doubt exists that the taxpayer could ever pay the full amount of tax owed.
  3. 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. 
  4. To be eligible for a compromise on this basis, the taxpayer must demonstrate that collection of the tax would create an economic hardship or would be unfair and inequitable.
As the result of the issuance of the revised Form 656, Offer in Compromise (2/2007 revision), a taxpayer is now required to file a Form 656-L, Offer in Compromise (Doubt as to Liability) when it is believed that the tax liability is incorrect, while Form 656, Offer in Compromise should be filed only when there is doubt as to collectibility that the tax liability could ever be paid in full, or under the basis of Effective Tax Administration (ETA). A taxpayer is no longer able to file offers concurrently claiming both that the tax liability is incorrect along with an inability to pay it.

Form 656, Offer in Compromise (2/2007 revision) also incorporates changes in the processing guidelines as the IRS will no longer investigate an offer for a tax year or tax period that has not been assessed. The IRS will return your Offer in Compromise back to the taxpayer if it is submitted solely for an unassessed tax year or tax period.

Taxpayers should beware of promoters' claims that IRS tax debts can be settled for "pennies on the dollar" through the Offer in Compromise program.

NOT EVERY TAXPAYER IS ELIGIBLE 
TO SETTLE WITH THE IRS

FLAT FEE TAX SERVICE, INC.

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