The IRS “Offer in Compromise”


When taxpayers cannot satisfy their tax debts, the Internal Revenue Code (“IRC”) provides a method to satisfy those debts for less than the amount owed, called an Offer in Compromise.  IRC Section 7122 permits to the IRS to accept less than the amount owed if there is a doubt as to collectability or liability.  However, there are many misconceptions  out there about the Offer in Compromise rules, many of which are fueled by radio commercials promising to negotiate a settlement for “pennies on the dollar”.

An Offer in Compromise can be a great way to get a clean start with the IRS when there is a legitimate situation where the taxpayer will not be able to repay the debt, and the IRC has fairly clearly defined those circumstances.

This article from the Tax Advisor gives a nice summary of the rules, when the IRS will even consider an offer, and their criteria for acceptance or rejection of the offer.

Of course, we would be happy to assist should you desire to pursue an Offer in Compromise.


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