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Offer in Compromise

The IRS will consider settling a taxpayer’s debt for less than is owed in cases where there is a doubt as to collectibility, liability or, in certain situations, to promote fairness and equity by avoiding economic hardship.  The IRS will not accept an offer if the amount owed can be paid in full or via an installment agreement.  The amount offered must meet the reasonable collection potential (current assets plus anticipated future income) as determined by the IRS on Forms 433A and 656.

Tax Tip – The IRS warns that taxpayers should beware of unscrupulous promoter claims promising to settle tax debt for pennies on the dollar, often charging excessive fees to taxpayers who have no chance of meeting the program’s requirements.
Businessman waiting to shake hands over a contract for tax offer