Sunday, April 1, 2012

An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship. We consider your unique set of facts and circumstances: Ability to pay;Income;Expenses; and Asset equity.

The IRS will generally approve an offer in compromise when the amount offered represents the most it can expect to collect within a reasonable period of time. Explore all other payment options before submitting an offer in compromise.

Before the IRS will consider your offer, you must be current with all filing and payment requirements. You are not eligible if you are in an open bankruptcy proceeding.  Submit the offer on Form 656 and 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms.  It must be filed with a $150 fee and 20% of the offer.

If your offer is accepted If your offer is rejected
  • You must meet all the Offer Terms listed in Section 8 of Form 656, including filing all required tax returns and making all
  • You may appeal a rejection within 30 days using Request for Appeal of Offer in Compromise, Form 13711 (PDF).

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