The offer in compromise (OIC) program is administered by the Internal Revenue Service (IRS). An offer in compromise allows individuals to settle their tax debt for less than the full amount they owe, taking into consideration their ability to pay, income, expenses, and asset equity.
The IRS will evaluate an offer in compromise based on whether the offered amount represents the maximum they can expect to collect within a reasonable timeframe. To be eligible for an offer in compromise, individuals must have filed all required tax returns, made estimated payments, not be involved in an open bankruptcy proceeding, have a valid extension for the current year’s return, and have made tax deposits as an employer for the current and past two quarters.
If the IRS is unable to process an offer in compromise, they will return the application, application fees, and any offer payments included, applying the payments to the outstanding balance. There are different payment options available, including a lump sum cash payment or periodic payments.
Individuals who meet low income certification guidelines do not have to submit an application fee, initial payment, or make monthly installments while the IRS reviews the offer. In case an offer is rejected, individuals have the right to appeal within 30 days using the Request for Appeal of Offer in Compromise, Form 13711, and the IRS Independent Office of Appeals provides additional assistance.
It is important to note that the offer in compromise process can be complex, and seeking professional guidance, such as consulting with a tax attorney at Anderson Bradshaw, can be beneficial in navigating the process and increasing the chances of a successful outcome.