Offer In Compromise (OIC Settlements)

• Please see our advisory about national tax agencies.

The Offer in Compromise program is administered by the IRS and various state agencies in order to assist the tax collection agencies in the reasonable administration and collection of tax debts that may never be settled.  

What is an Offer in Compromise? 

An offer is essentially an agreement that settles outstanding tax liabilities for a fractional amount of the actual liability that is owed. The acceptance of offers is completely at the discretion of the taxation agency, which will not accept them unless the amount offered by the taxpayer is larger than or equal to their collection potential over the time the agency has to collect the tax. The taxing entities look at the taxpayer’s assets, current and future income and earning potential when calculating a taxpayer’s collection potential.  Special exceptions are made for taxpayers with severe financial hardship or other extenuating circumstances. However, in tough economic times, offers are often difficult to get accepted without the assistance of counsel – the last statistics published suggest that the offer acceptance rate was less than twenty percent.  

Be wary.  There are many scams associated with the Offer in Compromise program that are promoted by third parties. Many national tax agencies will offer to settle your tax debt for pennies on the dollar and will quote an affordable price for preparation. However, this fee does not include many of the hidden extras associated with the offer process. Most national tax agencies only prepare the tax forms associated with an offer in compromise and will not pre-screen offers for acceptance, review substantiation documents, negotiate with the IRS after the initial determination, or guide you through the appeals process should your offer not be accepted. We have encountered a number of these scams in our daily practice and encourage taxpayers to be vigilant when choosing tax counsel to represent them in the Offer in Compromise process. For more information, please see our current bulletin on National Tax Agencies.  

Filing and negotiating an offer requires an extensive background in Federal Tax Procedure. Your tax professional must know the laws and Internal Revenue Manual guidelines for the various methods that the IRS uses to evaluate reasonable collection potential such as dissipated assets and for offer acceptance itself.   

Upon retaining us, all potential offer candidates go through a rigorous financial analysis to determine if an Offer in Compromise is right for you. We work intimately with our clients to draft an offer that is carefully tailored to your individual situation and we will also help you gather the necessary supporting documentation. Once the federal or state government has processed your offer, our skilled negotiating team will work diligently to get you the best possible resolution. Because we only file quality offers and are extremely experienced in preparing them, we have a high success rate with both federal and state tax authorities. Let our reputation and our record work for you. Please call our office today to schedule a free consultation and to find out if you are a candidate for an Offer in Compromise.