Offer In
Compromise, Tax Debt
Negotiation.
The Offer in Compromise (or OIC)
Tax Debt Negotiation program, in the United States,
is an Internal Revenue Service
(IRS) program under 26 U.S.C. §
7122 which allows qualified
individuals with an unpaid tax
debt to negotiate a settled
amount that is less than the
total owed to clear the debt. A
taxpayer uses the checklist in
the Form 656, Offer in
Compromise, package to determine
if the taxpayer is eligible for
the offer in compromise program.
The objective of the OIC program
is to accept a compromise when
acceptance is in the best
interests of both the taxpayer
and the government and promotes
voluntary compliance with all
future payment and filing
requirements.
Qualifying conditions
At least one of three conditions
must be met to qualify a
taxpayer for consideration of an
OIC settlement:
Doubt as to Liability — Debtor
can show reason for doubt that
the assessed tax liability is
correct
Doubt as to Collectability —
Debtor can show that the debt is
likely uncollectable in full by
the IRS under any circumstances
Effective Tax Administration —
Debtor does not contest
liability or collectability but
can demonstrate extenuating or
special circumstances that the
collection of the debt would
"create an economic hardship or
would be unfair and
inequitable." This Offer in
Compromise program is available
for any taxpayer, but is
primarily used by individuals
that are elderly, disabled, or
have special extenuating
circumstances. In 2006, only one
Offer in Compromise was accepted
the entire year by the Internal
Revenue Service.
Lowest acceptable offer
The above formula may be
applicable in cases where you
owe a very large sum and you
have a significant amount of
disposable income. However,
"doubt as to collectability"
implies the inability to pay.
The IRS has been known to accept
offers in compromise as low as
10%, 1%, and $1 (One Dollar),
but this is, as you can imagine,
very rare.
If your disposable income is $0,
you do not expect to have
disposable income for some
years, you have special
circumstances, you have zero
assets and if paying this debt
would cause a hardship, the IRS
has been known to accept ONE
DOLLAR to settle your tax
liability through the Offer In
Compromise. Said provision takes
effect 60 days after the
signing.
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Tax help is available for anyone in any of the following states and overseas,
Alabama AL, Alaska AK, Arizona
AZ, Arkansas AR, California CA,
Colorado CO, Connecticut CT,
Delaware DE, District of
Columbia DC, Florida FL, Georgia
GA, Hawaii H, Idaho ID, Illinois
IL, Indiana IN, Iowa IA, Kansas
KS, Kentucky KY, Louisiana LA,
Maine ME, Maryland MD,
Massachusetts MA, Michigan MI,
Minnesota MN, Mississippi MS,
Missouri MO, Montana MT,
Nebraska NE, Nevada NV, New
Hampshire NH, New Jersey NJ, New
Mexico NM, New York NY, North
Carolina NC, North Dakota ND,
Ohio OH, Oklahoma OK, Oregon OR,
Pennsylvania PA, Rhode Island
RI, South Carolina, South
Dakota, Tennessee TN, Texas TX,
Utah UT, Vermont VT, Virginia
VA, Washington WA, West Virginia
WV, Wisconsin WI, and Wyoming,
WY
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