What is an Offer in Compromise (OIC)?
The OIC is a program that allows a taxpayer to settle their delinquent taxes for less than the total amount the IRS claims they owe. The OIC is the most commonly used of all tax resolution programs. And more recently, new OIC guidelines have given even more opportunities to those who previously did not qualify for an OIC under previous program guidelines. These guidelines, when correctly applied, result in taxpayers reaching favorable settlements. If these guidelines are not applied properly, a taxpayer’s OIC may be rejected or, even worse, the taxpayer may overpay.
Offer in Compromise Programs use Form 656
Doubt as to Collectability
A Doubt as to Collectability Offer in Compromise is negotiated based on a taxpayer’s inability to pay and considers the taxpayer’s current financial position including the taxpayer’s equity in assets.
Doubt as to Liability
A Doubt as to Liability Offer in Compromise allows taxpayers that do not agree that they owe the tax or feel that the tax has been incorrectly calculated, an opportunity to have their tax liabilities reconsidered.
Effective Tax Administration (ETA)
Effective Tax Administration Offer in Compromise is negotiated when there is no doubt that the tax is legally owed and that the full amount owed can be collected but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.
Get Professional Help with Negotiating an Offer in Compromise
If you’re considering an offer in compromise, it’s best to have a professional by your side. Tax Response Center’s tax professionals are experienced in preparing, submitting, and settling these cases. They can answer any questions you have and help you assess your options.
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