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 which could be reasonably
This is when you ask IRS to take less than 100 cents on the dollar for what you owe them. The government will sometimes settle for less than full payment if there is doubt as to the amount due, or if you simply don’t have the financial capacity to pay the full amount due. Congress has recently instructed IRS to consider new grounds for compromising taxes, such as financial or medical hardship. Click here for more information about offers 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 Offer in Compromise (OIC) program was established by the U.S. Congress to help taxpayers who have experienced significant financial problems to get a fresh start. Back tax liabilities, penalties and interest can be settled. All federal tax liens can be released once the IRS accepts the OIC and the negotiated settlement amount is paid. If you qualify for the OIC program, you can save thousands of dollars in taxes, penalties and interest. Taxpayers can negotiate settlements on all types of taxes, including most payroll taxes, penalties, and interest. The OIC program provides taxpayers who owe the IRS more than they could ever afford to pay, the opportunity to pay a small amount as a full and final payment. The IRS has the authority to settle, or compromise, federal tax liabilities by accepting less than full payment under certain circumstances. Th
A. – It is a formal agreement between you and the Internal Revenue Service, State of Iowa, or other taxing authority. Acceptance of the agreement will absolve you of all taxes, penalty, and interest owing in exchange for a payment and future tax compliance. A separate form and documentation is submitted to each tax authority.
