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What’s Up with an IRS Offer in Compromise?

Updated: Sep 21


Coast to Coast - IRS Help

IRS Tax Relief - Tax Debt Help

An Offer in Compromise (#OIC) allows you to settle a tax liability for dramatically less than the full amount owed. A well put together Offer in Compromise is a tax relief option if you lack the ability to pay your IRS debt after paying your everyday expenses. What’s considered by the IRS in allowing an offer in compromise? 1. Ability to pay.

2. Current Income.

3. Everyday Allowable Expenses.

4. Asset equity. The IRS "claims" that it generally approves an Offer in Compromise when the amount offered represents the most the agency can expect to collect within a reasonable period. The agency advises that you explore all other payment options before submitting an offer in compromise. Over the past 5 years, or so, the IRS has been approving approximately 42% of all the settlement offers submitted. What the IRS will not advertise is that 70% of all Offer in Compromise rejections are happen during the initial process. Why is that? Well, it's due to the IRS encouraging taxpayers to do their own (Do It Yourself) Offers. Most rejections are due to paperwork issues. In all honesty, a novice has little to no chance of success. Can a novice individual submit a successful Offer in Compromise? Yes. But is it likely? NO! That's just the statistical facts.

The IRS provides all sorts of "teasers" to get an individual to file their own Offer in Compromise. If the OIC is rejected, who wins? The biggest tease is the "Pre-Qualifier." You can go to the IRS website and use their pre-Qualifier. A naïve taxpayer will plug their info and may get a positive answer. If it was this easy, the IRS approval rate would be much higher than 42%. The IRS has posted an OIC Pre-Qualifier that confirms your eligibility and prepares a preliminary proposal.

You’ll also find step-by-step instructions in the Offer in Compromise Booklet, as well as Form 656-B for submitting an offer. Your completed offer package will include:

a. Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms.

b. Form 656(s) — individual and business tax debt (Corporation/LLC/Partnership) must be submitted on separate Form 656.

c. The $205 application fee (nonrefundable).

d. The initial payment (nonrefundable) for each Form 656. The Offer in Compromise process is complex, and an OIC might not be your only or even your best option. If you’re having tax problems, your best bet is to work closely with a qualified financial professional. The tax professionals at Flat Fee Tax Relief has a 96% Offer in Compromise rate of success. You may ask, "Why are your successful?" Our teams are so successful because we play it straight with everyone who calls in for a free consultation.

1. We give honest evaluations.

2. We don't over promise.

3. We don't give you false information just to get you to be a client. 4. We like being successful. 5. We only do submit an Offer in Compromise that we know will fly right.


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