The IRS has posted a series of videos explaining how to make an offer in compromise (“OIC”). You may want to make an OIC if you have an unpaid federal tax debt that’s beyond your reasonable ability to pay. If the IRS accepts your offer, your debt will be reduced to an amount you can handle so you can get on with your life.
The OIC process has some strict eligibility rules, including a requirement that you’re up to date in filing all your tax returns. For those who are eligible, the process is anything but quick and easy. Take this on without professional assistance only if you’re reasonably well organized and have the patience to work through instructions, gather all necessary information and enter it into the appropriate forms. You’ll also need to be prepared for long delays from the IRS in processing your offer.
More than half these offers are rejected, especially those prepared without professional help. Many filers hope to avoid paying the full amount they’re able to pay, and make an offer too low for the IRS to accept. Many others fail to meet all the requirements. For those who qualify, and make an acceptable offer, the process can provide the proverbial new lease on life.
If you think you need professional help preparing your OIC, take care to use a reputable professional. This is an area where scammers seek to lure customers with a promise they’ll reduce a tax debt to mere pennies on the dollar, but fail to deliver. A capable pro can make the difference in whether your OIC succeeds, though.
For those who want to tackle this on their own, IRS covers the entire application in videos with total length a little over an hour (more if you also have a business entity that needs relief). Congress keeps the IRS strapped for cash, and perhaps for that reason the videos are distinctly lacking in production values. They do the job, though, and if you don’t like viewing them, you can simply read the script, which appears when you scroll down from the video.