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Offer in Compromise Processing Policy

IRS Policy for Processing OIC

The IRS is required to process all submitted offers, with two exceptions:

  • When the taxpayer is currently in bankruptcy
  • If the taxpayer has not filed all required tax returns

Additionally, taxpayers have their appeal rights and other protections under the Taxpayers Bill of Rights.

Once the Offer In Compromise process is completed the IRS is permitted to accept an offer under any of the following circumstances:

  • Doubt as to liability (the taxpayer might not owe any tax)-

    When an offer is based on doubt as to liability, a $100 offer could extinguish a $1 million tax liability. (Read more about Liability Doubt.)

  • Doubt as to collectivity (the taxpayer does not have the resources to pay the amount owed)-

    Doubt as to a taxpayer's collectibles requires financial forms (listing current assets and liabilities as well as income and current expenses) and entails an analysis of a taxpayer's assets and earning capacity. (Read more about Collectibility Doubt.)

  • Effective Tax Administration (ETA)-

    The taxpayer has no doubt that the tax is correct and there is no doubt that the full amount of tax owed could be collected, but an exceptional circumstances exists that would allow the IRS to consider your offer. You must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable. (Read more about Administration Doubt.)

If you have outstanding tax debt and are looking for Tax Relief, consult with an experienced tax attorney to see if you qualify for an Offer In Compromise.