What is an Offer-in-Compromise?
An Offer-in-Compromise (OIC) is an Internal Revenue Service procedure that will enable some taxpayers to settle a tax debt for less than the full amount owed. This procedure is an appropriate method to settle a taxpayer’s debt when he is unable to pay the total amount due or paying the tax would create a financial hardship for the taxpayer. Not everyone or every situation will be eligible for the Offer-in-Compromise settlement.
The IRS will not accept an OIC unless the taxpayer has:
- filed all current tax returns or extensions
- made all estimated tax payments for the current year
- filed all past due tax returns
- is not in an open bankruptcy
The IRS will consider the taxpayer’s ability to pay, his current income and expenses (based on published national standards) and the value of the taxpayer’s personal assets when deciding to accept or reject the offer. Offers are generally accepted when the IRS determines that the amount offered by the taxpayer is the maximum amount, they can expect to collect within the applicable collection period.
Taxpayers may submit an offer themselves by completing Form 656-B, which is the OIC booklet. The booklet, instructions and an Offer-in-Compromise Pre-Qualifier are available on the IRS website. Taxpayers may complete and submit an OIC without the assistance of a tax professional however, we would suggest that he obtain professional help from an IRS Enrolled Agent (EA) or a CPA.
Peoples Tax has IRS Enrolled Agents and CPAs on staff and can assist you with any tax issues you may be having. Give us a call at (804) 204-1040 or email us today to find out how we can assist you!
If you’re in Richmond, Virginia (RVA), we can meet at one of our RVA tax offices. If you are further away, we can handle your issues remotely by phone, email, Skype, our virtual portal and more!