When to use an Offer in Compromise and how to have it accepted

For the IRS to even consider approving an Offer in Compromise, three specific criteria from the OIC Program must be met. All data provided on Form 656 will be reviewed by the IRS and the following criteria will be used to determine the agency’s final decision how to get an offer in compromise approved

Possible Questions About Legal Responsibility

Whether or not a taxpayer has the financial resources to pay the full amount is unrelated to the requirement. It’s possible that the person and the IRS simply disagree on the amount of back taxes owed. This fact may prompt the IRS to settle for a lower sum in order to urge the taxpayer to make a payment of any kind. The repayment of the liability may also be subject to legal constraints.

There’s some scepticism about our ability to collect

To meet this condition, the taxpayer must convince an IRS agent that it is extremely improbable the taxpayer will be able to pay the whole amount due. They examine the client’s assets, liabilities, income, and expenses with great detail to ascertain whether or not the taxpayer can afford to pay the overall tax bill. The Internal Revenue Service (IRS) is checking to see if the individual has enough money to cover their entire tax bill. The IRS will consider all reported income and remove any reasonable expenses before making a final judgement on what to do with the requested OIC, based on the borrower’s demonstrated ability to repay the debt.

It would be extremely difficult to pay the total amount

This mandate provides the person with the best possible chance to persuade the IRS that they need to renegotiate a smaller amount of money to make it less of a financial hardship for the taxpayer. If, after reviewing the data provided in the Request for Offer of Compromise (Form 656), it is determined that the terms of the compromise cannot be met. When deciding whether or not to accept an Offer in Compromise, the government may take into account a compelling equity or public policy argument.