What is an Offer In Compromise (OIC)

An Offer In Compromise (OIC) is a program offered through the IRS that lets qualified taxpayers with unpaid tax debt negotiate a settlement for less than the total amount of the tax debt owed. When you hear ads on TV or the Radio about customers who saved huge amounts of money (sometimes hundreds of thousands of dollars), those ads are probably referring to people who successfully settled their tax debt with an OIC.

For taxpayers, an OIC seems like the best solution, but it is only a solution for qualified taxpayers. Good tax resolution professionals typically submit an Offer In Compromise for only 1 or 2 out of 10 taxpayers they work with because they know only a few cases will qualify for approval by the IRS. Bad tax resolution companies will submit as many offers as their clients are willing to pay them for, knowing full well that very few of their clients will actually qualify for approval of their OIC.

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Who Gets Accepted for an Offer In Compromise?

The Offer In Compromise program is designed for taxpayers that meet very specific criteria, and is only approved if the IRS believes that it is in its best interest of collecting current and future tax payments from the taxpayer. Some examples of criteria that must be met for consideration of an OIC settlement are:

  • Doubt as to Liability - showing reason why the tax liability may be incorrect
  • Doubt as to Collectibility - showing that the tax debt may be uncollectable, ever
  • Special Extenuating Circumstances - for elderly, disabled, or exceptional cases
  • A tax resolution professional is paid to know who qualifies and who doesn't, as well as writing an Offer In Compromise that will likely get accepted by the IRS. If you are considering this solution, you should consult with a tax professional who is experienced at OIC's and is willing to publish their success rate of approval.

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    Consumer Alert for Offer In Compromise

    Because an Offer In Compromise is so attractive to taxpayers, many tax resolution companies have tried to exploit the program and scam innocent taxpayers. Since 2004, the IRS has issued a consumer alert to warn taxpayers that there are predatory companies in the industry. Since 2004, many prominent tax resolution companies have declared bankruptcy and/or been sued with class action lawsuits. Companies like American Tax Relief, Roni Deutch, TaxMasters, and JK Harris are all recent examples of why taxpayers need consumer protections.

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    How to Decide if an OIC is Right for You

    If you are considering an Offer In Compromise (OIC) as a possible tax solution for your tax problems, we strongly urge you to consult a tax resolution professional by using The Review

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    How do I Know if I Should Contact a Tax Professional?

    An OIC can have big consequences, for better or worse, so don't go it alone. If you're considering it, consult a tax pro. Click Here to Find a Pro