IRS Offer in Compromise: Settle Your Tax Debt for Less

Could You Qualify for an IRS Offer in Compromise?

If you owe back taxes to the IRS and cannot realistically pay the full amount, an IRS Offer in Compromise (OIC) may provide an opportunity to settle your federal tax debt for less than the total amount owed.

However, not everyone qualifies.

Tax Help Hawaii can evaluate your financial situation, determine whether an Offer in Compromise may be appropriate, and help qualified taxpayers navigate the IRS application and negotiation process.

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Call Tax Help Hawaii: 310-966-0266

What Is an IRS Offer in Compromise?

An Offer in Compromise, commonly called an OIC, is an IRS tax resolution program that allows qualifying taxpayers to settle a tax liability for less than the full amount owed.

The IRS considers several factors when evaluating an offer, including your:

The amount you owe by itself does not determine whether you qualify.

Tax Help Hawaii can review your financial circumstances before recommending an Offer in Compromise so you have a better understanding of whether this tax relief option may be appropriate for you.

Three Bases for an IRS Offer in Compromise

An Offer in Compromise generally falls under one of three categories:

Doubt as to Collectibility

This may apply when there is doubt that the IRS could collect the full tax liability within the applicable collection period based on the taxpayer’s assets, income and financial circumstances.

Doubt as to Liability

This applies when there is a legitimate dispute about whether the assessed tax liability is correct or whether the taxpayer actually owes all or part of the tax.

Effective Tax Administration

In certain circumstances, the IRS may consider an Offer in Compromise even when the tax could technically be collected in full if requiring full payment would create an economic hardship or would otherwise be considered unfair or inequitable under applicable IRS rules.

FAQ's

Frequently Asked Questions

How Does the IRS Determine Your Offer Amount?

One of the most important parts of an Offer in Compromise is determining what the IRS believes you have the ability to pay.

The IRS generally evaluates your financial information, including income, allowable expenses, available assets and future ability to pay.

This is why submitting an arbitrary amount to the IRS isn’t an effective strategy.

Tax Help Hawaii will evaluate your financial circumstances and help determine whether an Offer in Compromise is a realistic tax resolution option before moving forward.

Do You Qualify for an Offer in Compromise?

Before the IRS will generally consider an Offer in Compromise, taxpayers must satisfy certain eligibility and compliance requirements.

Depending on the circumstances, these may include filing required tax returns and making required current tax payments.

There may also be restrictions for taxpayers involved in an open bankruptcy proceeding.

Before preparing an OIC, Tax Help Hawaii will review your tax situation to determine whether you appear to meet the applicable requirements and whether another IRS resolution option might be more appropriate.

What Happens to IRS Collection Activity During an OIC?

IRS collection rules provide important protections during certain stages of the Offer in Compromise process.

Generally, the IRS suspends levy action on the tax liabilities included in an Offer in Compromise while a properly submitted offer is pending, for a period following rejection, and while a timely appeal of a rejection is being considered.

However, exceptions can apply.

Because collection issues are highly dependent on the taxpayer’s individual circumstances, you should not assume that simply planning to submit an Offer in Compromise automatically stops an existing levy or other collection action.

If you’re currently facing an IRS wage garnishment, wage levy or bank levy, contact Tax Help Hawaii as soon as possible.

What Happens After an Offer Is Submitted?

The IRS reviews the taxpayer’s eligibility, financial information, supporting documentation and proposed settlement amount.

During that process, the IRS may request additional documents or clarification.
Responding accurately and on time is important.

Tax Help Hawaii can represent qualifying clients before the IRS under a valid Power of Attorney, communicate with the IRS regarding the case, respond to requests for information, and help guide the Offer in Compromise through the review process.

What If an Offer in Compromise Isn't Right for You?

An OIC isn’t the right solution for every taxpayer.

Depending on your financial circumstances, other IRS tax resolution options may be more appropriate, including:

IRS Installment Agreements
Currently Not Collectible / Hardship Status
Penalty relief when applicable
Resolving unfiled tax returns
Other IRS tax resolution strategies

Our goal isn’t to sell you an Offer in Compromise.
Our goal is to identify the tax resolution strategy that best fits your circumstances.

Professional Offer in Compromise Help

Preparing an Offer in Compromise involves much more than completing an IRS form.

Your financial information must be carefully evaluated, supporting documentation may be required, and the proposed offer must be considered in relation to applicable IRS standards.

Tax Help Hawaii has been helping taxpayers address serious IRS and State tax problems since 2009.

For qualifying representation matters, we can communicate with the IRS on your behalf and help you navigate the Offer in Compromise process from initial evaluation through resolution.

Find Out If You May Qualify

If you owe the IRS more than you can realistically afford to pay, an Offer in Compromise may be worth exploring.

Let Tax Help Hawaii review your situation and explain your available options.

FREE Tax Relief Consultation
Call Tax Help Hawaii: 310-966-0266

Serving Maui, Hawaii and taxpayers nationwide with qualifying federal IRS tax matters.

Offer in Compromise eligibility, settlement amounts and outcomes depend on each taxpayer’s individual financial circumstances and IRS approval. Past results do not guarantee future outcomes.