What is an Offer in Compromise and how does it work?
An Offer in Compromise is just what it suggests – That in certain circumstances IRS will accept less than the full amount due for taxes, penalties and interest in full settlement of that amount. Usually it is based upon inability to pay that full amount. In order for IRS to determine whether it will accept such an offer, it is necessary to submit to IRS complete and exhaustive financial information, including assets, liabilities, and current average monthly income and expenses. If the offer is accepted it will completely satisfy the tax obligations with respect to which the offer is submitted, and any tax liens that have been filed regarding those taxes will be released. IRS is prohibited from levying on assets while an Offer in Compromise is pending.
