Offer in Compromise

An offer in compromise (OIC) is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Absent special circumstances, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through a payment agreement.

In most cases, the IRS will not accept an OIC unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (RCP). The RCP is how the IRS measures the taxpayer’s ability to pay and includes the value that can be realized from the taxpayer’s assets, such as real property, automobiles, bank accounts, and other property. The RCP also includes anticipated future income, less certain amounts allowed for basic living expenses.

Three Types of OICs

The IRS may accept an offer in compromise based on three grounds:

1. Doubt as to Collectibility – Doubt exists that the taxpayer could ever pay the full amount of tax liability owed within the remainder of the statutory period for collection.

2. Doubt as to Liability – A legitimate doubt exists that the assessed tax liability is correct. Possible reasons to submit a doubt as to liability offer include: (1) the examiner made a mistake interpreting the law, (2) the examiner failed to consider the taxpayer’s evidence or (3) the taxpayer has new evidence.

3. Effective Tax Administration – There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed, but an exceptional circumstance exists that would allow the IRS to consider an OIC. To be eligible for compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.

The IRS is not bound by either the offer amount or the terms proposed by the taxpayer.  The OIC investigator may negotiate a different offer amount and terms, when appropriate.  The investigator may determine that the proposed offer amount is too low or the payment terms are too protracted to recommend acceptance. In this situation, the OIC investigator may advise the taxpayer as to what larger amount or different terms would likely be recommended for acceptance.

Even if you cannot pay all of your back taxes, you can still stop the IRS’s enforced collection actions and try to settle your tax liabilities by negotiating a reasonable monthly payment plan or an offer in compromise settlement that pays a fraction of what is owed.  At Bucci Law Offices, our tax attorneys can help you establish these alternative payment methods as well as analyze and assess other options that may be more suitable to resolving to tax problems.   Bucci Law Offices can be your tax advocate and fight for your rights!

How Can Bucci Law Offices Help?

Dealing with the IRS alone can be very intimidating, often times, resulting in nothing more than increased interest and penalties being assessed against you.  We can eliminate this stress for you.  You can stop answering harassing phone calls and receiving letters from the IRS.  Instead, you can have us, your trusted partner, deal with the IRS on your behalf and help you get the results you need.  The tax attorneys at Bucci Law Offices have extensive experience with the IRS and can navigate through their rules and regulations, while advising you of your best possible options for resolving your IRS problems.

Remember, IRS problems do not go away by themselves and usually require immediate attention.  You need to know your rights and understand your options.  At Bucci Law Offices, our tax attorneys can help you analyze and assess the options most suitable to resolving your tax problems. You need someone in your corner to protect your rights and interests – we can do just that.  Bucci Law Offices can be your tax advocate and fight for your rights!

Contact Bucci Law Offices today to get the help you need and deserve.  Each second you delay is costing you money!  How long can you afford to do nothing? Call Bucci Law Offices now at 954-764-4440 or 877-764-4440 to learn more about how we can help you with your tax resolution!