What is an offer in compromise (OIC)?
An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax debt. The IRS has the authority to settle, or “compromise,” federal tax liabilities by accepting less than full payment under certain circumstances. A tax debt can be legally compromised for one of the following reasons: * Doubt as to liability – Doubt exists that the assessed tax is correct. * Doubt as to collectability – Doubt exists that the taxpayer could ever pay the full amount of tax owed. * Effective Tax Administration – There is no doubt the tax is correct and could be collected but an exceptional circumstance exists that allows the IRS to consider a taxpayer’s OIC. To be eligible for a compromise on this basis, the taxpayer must demonstrate that collection of the tax would create an economic hardship or would be unfair and inequitable.
Related Questions
- An Offer in Compromise ("OIC") is a way for taxpayers to compromise their outstanding tax obligations without having to pay the full liability owed. Do I qualify for an Offer in Compromise?
- What does the Board of Equalization (Board) consider a fair Offer in Compromise (OIC) in relation to the amount due?
- Offer in Compromise Questions Offer Determinations 401 What happens if the IRS accepts an OIC?
