Offer in Compromise

MyOfferInCompromise delivers a solid solution for navigating the IRS' Offer In Compromise process.

An offer in compromise (OFFER IN COMPROMISE) is an agreement between a taxpayer and the Internal Revenue Service (IRS) that resolves the taxpayer's tax liability. The IRS has the authority to settle, or compromise, federal tax liabilities by accepting less than full payment under certain circumstances. The IRS may legally compromise for one of the following reasons:

• Doubt as to Liability: Doubt exists that the assessed tax is correct.
• Doubt as to Collectibility: Doubt exists that the taxpayer could ever pay the full amount of tax owed. The minimum offer amount must generally be equal to (or greater than) the taxpayer's reasonable collection potential (RCP). The RCP is defined as the total of the taxpayer's realizable value in real and personal assets, plus his/her future income.

Unless the taxpayer files an OFFER IN COMPROMISE claiming special circumstances, the offered amount must equal or exceed the reasonable collection potential. Realizable value is the asset's quick sale value (amount which could be reasonably expected through the sale of the asset) minus what the taxpayer owes to a secured creditor.

• Effective Tax Administration: There is no doubt that the tax is correct and no doubt that the amount owed could be collected in full, but exceptional circumstances exist such that collection of the full amount would create economic hardship or where compelling public policy or equity considerations provide sufficient basis for compromise. The taxpayer bears the burden of proof to show their OFFER IN COMPROMISE qualifies for public policy or equity considerations. They must show that their circumstances are compelling enough to justify acceptance of their OFFER IN COMPROMISE compared to other taxpayers in similar circumstances.

Who Is Not Eligible For The Offer in Compromise Program

You are not eligible for consideration of an Offer in Compromise on the basis of doubt as to collectibility or efficient tax administration if:

• You have not filed all required federal tax returns, or
• You are involved in an open bankruptcy

How the IRS Determines an Acceptable Offer Amount

Basic Guidelines for an Offer in Compromise Based on Doubt as to Collectibility.

Unless you have a special hardship case that warrants a lower amount, the IRS generally applies the following principles in evaluating Offers in Compromise from taxpayers. In determining the amount that the IRS could collect from you, the IRS uses a formula called Reasonable Collection Potential to arrive at a minimum offer. In determining the Reasonable Collection Potential the IRS looks at the following two factors: Your Realizable Value of your assets and your Future Income. If your situation does not fall into the IRS's range, your offer will be rejected. However, MyOfferInCompromise will evaluate your Reasonable Collection Potential to help you plan and navigate your IRS settlement.

Do I have to come up with all the money in one lump sum?

There are 3 basic payment methods to pay off an accepted offer in compromise.

• Cash Offer-must be paid within 90 days of acceptance
• Short Term Deferred Offer- must be paid in installments within 24 months of acceptance
• Deferred Payment Offer-must be paid in installments over the remaining life of the collection statute. Currently not available through our system!

The Offer In Compromise Process

Below is the typical progression of the Offer In Compromise process. This process may last over a year, and may require the taxpayer to submit several rounds of additional information. Provided that the taxpayer provides accurate information, and is in compliance with the tax filing requirements, the taxpayer has the right to appeal a rejection or an unreasonable counter-offer.

The Offer in Compromise of TaxHelpers.com

MyOfferInCompromise is not intended to be used as legal advice and is not intended as a substitute for professional help. We strongly recommend that you consult legal counsel or other professional prior to submitting an offer in compromise. You must review and agree to Terms Of Use prior to using this site or downloading MyOfferInCompromise package. MyOfferInCompromise all rights reserved 2004.