IRS Offer in Compromise (OIC)

The IRS Offer In Compromise program allows taxpayers to settle their tax liabilities for less than the full amount. Taxpayers should use the checklist in the Form 656, Offer in Compromise, package to determine if they are eligible for an offer in compromise.

The objective of the Offer In Compromise program is to accept a compromise when it is in the best interests of both the taxpayer and the government (with a very heavy emphasis on the government) and promotes voluntary compliance with all future payment and filing requirements.

"Incorrectly prepared Offer in Compromise forms account for over half of all filings in the Offer in Compromise program..." say IRS executives.

So based on this statement, the real problem seems to be that most people file their own Offer in Compromise forms and over half of those Offers are determined by IRS to be "Unacceptable for Processing" and are returned to the taxpayers. Naturally, IRS will keep the mandatory $150 filing fee that everyone is required to pay.  IRS wins. You lose. Start all over and let's see how many times you can afford this expensive little fact of life.

So now let's get down to talking about the way this thing really works.

IRS is currently receiving significantly more Offer in Compromise files than their system can currently process. For example, let's say that 5,000 people from all across the country file Offers in an average month, but that IRS has the manpower and ability to process and work on only 2,400 of them. That means that each month they get 2,600 too many Offers in their system that they just can't work on. Well, lucky for them that 2,400 of those don't have all their i's dotted or their t's crossed or their boxes checked or signatures and dates in the right places or all of the required paperwork attached. So the IRS clerks keep the money that was sent in with them (after all, it's called an Application Fee and those people sent in their applications, didn't they?) and then send the paperwork back to the applicant taxpayer along with a form letter that doesn't specifically identify the problem along with some kind of language that says, "try again."

IRS policy has been to return as many OICs as possible to taxpayers informing them that their Offers are "Not Acceptable For Processing." By returning as many Offers as possible as quickly as possible, IRS hopes to cull out Offers that will not meet their stringent requirements for processing ability and acceptance of literally tons of paperwork.

Undermanned and outgunned, Fort IRS is circling its wagons and assuming a defensive posture to deal with the massive influx of unacceptable paperwork being filed by taxpayers and their representatives who make costly errors and may not know what they are doing. After all, how many times have you looked at a 44-page set of forms and instructions and could fill out the forms and follow the instructions without making a single mistake?

Luckily, we have been preparing tax returns and Offer in Compromise forms for over 25 years.

So if you are interested in learning more about our own little Guaranteed Offer in Compromise Program, click below.

Offer in Compromise Main Page Offer in Compromise Details Offer in Compromise Observations Offer in Compromise Guarantee Offer in Compromise Fees