Question: I owe a several years of back taxes, about $43,000, but do not have the money to pay the IRS. I want to get them off my back and heard of something called an Offer in Compromise. What is it and how do I get one?
Answer: An Offer in Compromise (“OIC”) is the IRS’ tax resolution debt settlement program. It’s a program for taxpayers who owe the IRS more money than they can afford to pay back, even over time. It’s the IRS’s version of a “fresh start” when it comes to tax debt. If approved, the IRS accepts a lesser amount (sometimes a fraction of what’s owed) to settle your debt. However, it isn’t always easy to gain approval due to its strict criteria. Most taxpayer’s fail when they attempt to go up against the IRS and try to do this themselves.
The IRS considers your income, assets, expenses, liabilities, ability to pay, and whether paying the full amount would cause financial hardship. It’s important to remember that the IRS wants its money and will only accept an Offer in Compromise if it thinks it couldn’t collect from you otherwise.
Your odds for approval increase significantly when you have an experienced tax resolution specialist in your corner when it comes to negotiating with the IRS.