Does the IRS really accept offers in compromise?

[paddywakk]

What is the name of your state? AZ

Does the IRS ever accept offers to reduce past due taxes like you see advertised by people claiming to arrange such offers?

 

[Taxing Matters]

What is the name of your state? AZ

Does the IRS ever accept offers to reduce past due taxes like you see advertised by people claiming to arrange such offers?

Yes, the IRS does accept some offers in compromise (OIC). But it is not nearly as easy as those ads from firms that I call offer mills imply. Those ads make it seem like anyone can settle their delinquent tax obligations for just "pennies on the dollar." And of course, that is not the case. I'm simplifying it a bit here, of course, but the basic premise for accepting an OIC is that (1) the taxpayer's current and projected future financial condition is such that the taxpayer cannot fully pay the liability over the period the IRS has to collect the liability and (2) what the taxpayer is offering in the OIC is more than the IRS would collect from any other collection method (seizure, levy, installment agreement, etc). What this means is that often the taxpayer has to tap a source of funds to contribute to the OIC that the IRS otherwise could not reach. Most commonly this involves the taxpayer getting some help from relatives or friends to chip in to make a viable offer to get the IRS off the taxpayer's back.

 

[paddywakk]

Yes, the IRS does accept some offers in compromise (OIC). But it is not nearly as easy as those ads from firms that I call offer mills imply. Those ads make it seem like anyone can settle their delinquent tax obligations for just "pennies on the dollar." And of course, that is not the case. I'm simplifying it a bit here, of course, but the basic premise for accepting an OIC is that (1) the taxpayer's current and projected future financial condition is such that the taxpayer cannot fully pay the liability over the period the IRS has to collect the liability and (2) what the taxpayer is offering in the OIC is more than the IRS would collect from any other collection method (seizure, levy, installment agreement, etc). What this means is that often the taxpayer has to tap a source of funds to contribute to the OIC that the IRS otherwise could not reach. Most commonly this involves the taxpayer getting some help from relatives or friends to chip in to make a viable offer to get the IRS off the taxpayer's back.

Thank you. That's what I thought.