7 Common Questions About IRS Offers in Compromise

One of the IRS settlement programs that confuses taxpayers the most is the IRS Offer in Compromise (OIC). To help anyone looking for a better understanding about the IRS OIC program, please enjoy the answers to the most frequently asked questions about Offers in Compromise.

1. What is an Offer in Compromise?

An OIC is an IRS tax resolution program that allows a taxpayer to settle their IRS back tax liability by paying less than they owe. The amount of a taxpayer's needs to pay will vary depending on the taxpayer's unique financial situation, as well as his or her original liability amount. However, it is usually significantly less than the tax debt owed. The IRS will only accept a taxpayer's OIC if it is equal to or greater than the reasonable collection potential, which is the IRS's measurement of the taxpayer's ability to pay their debt. Most taxpayer's will not qualify for this program.

2. What fees will I have to pay when I submit my OIC?

You will need to pay a $150.00 application fee, as well as a check or money order for 20% of the lump sump offer.

3. What will happen if I submit my offer without the 20% payment?

If you submit your offer without the 20% payment, then the IRS will reject your offer as not processable, and will return your OIC and $150.00 application fee back to you.

4. Is there any way to submit my offer without the application fee or 20% payment?

Yes, the IRS will allow you to submit an offer without the $150.00 application fee or the 20% payment if you meet the IRS's low-income taxpayer requirements. For more information about who qualifies as a low income taxpayer, check out this page on the IRS' website .

5. Will an Offer in Compromise remove a wage garnishment or bank levy?

Having an OIC accepted will not automatically remove a wage garnishment or bank levy. However, an accepted OIC will resolve your tax liability with the IRS so that you can request to have your garnishment or levy released.

6. How long does it take for the IRS to decide on an Offer in Compromise?

It can take the IRS several months to review your OIC. Additionally, once the IRS performs an initial review, they may have questions or require clarification from you regarding some of the representations that were made in the OIC. As such, there is really no way to tell how long it will take for the IRS to respond to your OIC.

7. What if my Offer in Compromise is rejected?

If your OIC is rejected, you still have other options to resolve your tax debt. You might qualify for placement into Currently Not Collectible status, which would essentially end all IRS collection activity on your account unless your financial situation changes. Or, you might qualify for an Installment Agreement that would allow you to pay off your tax debt through manageable monthly payments.

The Tax Lady Roni Deutch and her law firm Roni Deutch, A Professional Tax Corporation have been helping taxpayers across the nation find IRS tax relief for over seventeen years. The firm has experienced tax lawyers who can fight IRS tax liens on your behalf.