For more information, check out our Offers in Compromise Frequently Asked Questions and IRS Guidelines. What is an Offer in Compromise?
• An offer in compromise is an agreement between a taxpayer and the Internal Revenue Service that resolves the taxpayer’s tax liability. • The IRS has the authority to settle, or compromise, federal tax liabilities by accepting less than full payment under certain circumstances. • The IRS may legally compromise for one of the following reasons: • Doubt as to Liability • Doubt exists that the assessed tax is correct. • Doubt as to Collectibility • Doubt exists that the taxpayer could ever pay the full amount of tax owed. • The minimum offer amount must generally be equal to (or greater than) the taxpayer’s reasonable collection potential (RCP). • The RCP is defined as the total of the taxpayer’s realizable value in real and personal assets, plus his/her future income. • Unless the taxpayer files an Offer In Compromise claiming special circumstances, the offered amount must equal or exceed the reasonable collection potential. • Realizable value is the asset’s quick sale value (amount whi
