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The Elusive Offer In Compromise

The Elusive Offer In Compromise

By definition an offer in compromise allows you to settle your tax debt for less than the amount owed.  It is only a legitimate option for a taxpayer if they do not have any outstanding (unfiled) tax returns or are in an open bankruptcy proceeding.  While an offer in compromise does allow you to settle your tax debt for less than you owe it is rarely the “pennies on the dollar” advertised.

An offer in compromise depends on your ability to pay based on your income, expenses and your equity assets.  An offer in compromise is usually accepted by the IRS when the amount offered represents the most that they would expect to be able to collect within a reasonable period of time.  You should explore all other IRS programs prior to filing for an offer in compromise.

If you do decide to request an offer in compromise, the IRS offers two options for your initial payment based on your offer and the payment option you choose.  If you choose a lump sum payment you must submit an initial 20 percent of the total offer amount with your application fee.  If the offer is accepted, you will receive written confirmation and be given five or fewer payments to pay the debt.  If you choose periodic payments, you must submit your initial payment with your application fee an continue monthly payments while the IRS considers your offer.  The application fee is $186.

There are low-income certification guidelines, that may excuse you from sending in the application fee or the initial payment and under these circumstances, you will not need to make monthly payments while the IRS considers your offer.

The Process

While the IRS considers your offer your non-refundable payment and fees will be applied to the tax liability (you can designate payments to a specific tax year and tax debt).  The IRS can still file a Federal Tax Lien may still be filed.

If your offer is accepted any refunds due within the calendar year in which your offer is accepted will be applied to your tax debt.  Tax liens will not be released until your offer terms are satisfied.

To submit your offer you will need to provide information about your financial information about your financial situation, including cash investments, available cash, assets, income, and debt.  The IRS will also require our average household gross monthly income and expenses.

Although the process seems pretty straightforward the acceptance rate for an offer in compromise is just slightly more than 40% without the guidance of a tax professional.  The reason for such a small acceptance rate is what the IRS refers to as frivolous offers.  You can increase your odds to 95% or even explore better IRS programs by speaking to one of our Tax Professionals.  Our Enrolled Agents have more than 28 years of experience working with the IRS.  We promise straightforward options for taxpayers who owe the IRS.  We are A+ rated by the Better Business Bureau without a single complaint in all of those years.  Our blueprint for our long-lasting success has been honest answers and quick results without hidden fees.  For more information, you can call us at 561-293-3135 or email the author at or visit us at

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