Offers in Compromise

An offer in compromise(OIC) is a process which allows  taxpayers to settle their debt with the IRS for less than what was originally owed. The taxpayer fills out a form showing assets, liabilities, monthly income, and monthly basic living expenses. Documentation must be provided to support the amounts on the form. Using this information, the form calculates the offer amount. There is no negotiation involved. There is a $150 application fee and a 20% down payment if you propose to pay the tax in 5 or fewer installments. You can  submit a schedule to pay with more than 5 installments and then the first payment is due with the application. The payments are nonrefundable even if the IRS rejects the offer. As part of an acceptance of an OIC, the taxpayer agrees to comply with all tax return filing requirements for 5 years. In case of a default on a payment or a failure to file a return, the IRS can then sue the taxpayer for the balance due. The OIC is a difficult road to take with the IRS as most are rejected, but may be appropriate in some situations.