When reviewing Offer in Compromise applications, the IRS considers the taxpayer’s unique set of facts and any special circumstances affecting the taxpayer’s ability to pay…
An Offer in Compromise can be an effective way individuals and businesses to settle federal tax debt. This federal program allows taxpayers to enter into an agreement, with the IRS, that settles a tax debt for less than the full amount owed. Sometimes taxpayers are able to settle for significantly less, especially if they have low income and few assets.
This type of agreement is an option when taxpayers can’t pay their full tax liabilities or when paying the entire balance owed would cause financial hardship. The goal is a compromise that suits the best interests of both the taxpayer and the IRS.
When reviewing OIC applications, the IRS considers the taxpayer’s unique set of facts and any special circumstances affecting the taxpayer’s ability to pay.
Individual taxpayers and business owners should review the IRS’s Offer in Compromise Booklet to learn how these agreements work and decide if it could help them resolve their tax debts.