The IRS Offer in Compromise (OIC) is the most sought-after tax debt resolution. It’s an IRS debt settlement offer that can if accepted,  significantly reduce your tax liability. How do you know if you qualify? The IRS just announced new guidelines for its Fresh Start Program, which means you’re more likely to qualify now than ever before! 

Historically, the IRS approves approximately 34 to 42% of all OIC submissions. That may seem low but it really isn't. Let us explain. Most IRS settlements are rejected because the taxpayer (TP) decided for whatever reason to file their own OIC. "Doing It Yourself" is a gigantic mistake. The IRS will encourage TP's to submit their own OIC's because they know that mistakes will be made and the settlement offer can be rejected. In fact, the IRS calls these rejections UNPROCESSABLE.

The IRS will not divulge to the TP what the error is so the TP must start all over again. The IRS has 2 locations dedicated to scouring over OIC submissions. If you want to enhance your opportunity to settle your tax debt, use an experienced tax practitioner.

IRS HARDSHIP

Qualifications for an OIC are very similar to being placed into Currently not Collectible (CNC) status. The huge difference is an OIC actually settles a tax debt and CNC paces the tax debt into an "IRS limbo."

An Offer in Compromise needs to be documented and advocated that it is in everyone's best interest to settle. 

The TP is allowed items such as a car payment, food, and clothing, health insurance, housing, utilities, term life insurance, child support, etc. Don't expect payment for a Bentley to be allowed but the IRS will give you a $533 per month car payment. Also, upkeep of the car is allowed. As far as housing goes, the IRS uses numbers from the state, county, and city costs of living. As an example, it will cost more to live in New York City than it will in Broken Arrow, Oklahoma.

The IRS previously kept a TP's refund. Under the latest guidelines, the IRS will turn over the tax refund to the taxpayer. 

The TP's agrees to the following should their OIC be accepted:

1. File tax returns on time for 5 years.

2. Pay the tax debt at the time of filing should you owe. 

Due to COVID over the past several years, the IRS has been scrambling to keep up. It is our opinion that there will never be a better moment in time to file an OIC. 

The IRS problem-solvers at Flat Fee have a 96% OIC success rate. We achieve this by being totally honest with our clients and knowing what we are doing. We also have a very affordable, flat fee. As a "side note" the actual work involved in submitting an OIC hasn't changed. It is the same today as it was ten years ago. There is absolutely no good reason to pay $3000 to $6500 to do an OIC. 

We hope the above information has been useful. Got an IRS Notice? Get a FREE Risk Review.