An Offer in Compromise is a means of settling your tax debt for less than what you owe.

The IRS will accept an Offer in Compromise when the tax liability is unlikely to be paid and the offer represents a good deal for the IRS. Alternatively, an Offer in Compromise is also a method of  attacking a tax debt when the taxpayer does not owe the tax.

If the Offer in Compromise is based on the taxpayer’s inability to pay, the IRS will take into  account the taxpayer’s income and the value of most of the taxpayer’s assets that could be realized in a “quick” sale. To compute the value of the offer, you must take into consideration the IRS’ view of what are the necessary costs of housing, transportation, food, clothing, childcare, and healthcare. We have access to the statutes, cases, IRS rulings, and Internal Revenue Manuals that the IRS uses in analyzing offers.

In our opinion, an Offer in Compromise is almost always the wrong way to go, because the IRS is almost always going to reject the offer.  The reason is that the IRS has other solutions to your tax debt without writing the debt off.  This means, that even if you have no assets and very little income, you can still enter into an Installment Agreement or they can still classify you as currently not collectible without writing the debt off.

In fact, the IRS issued a pronouncement in 2004 as follows:

IR-2004-17, Feb. 3, 2004

WASHINGTON -- The Internal Revenue Service today issued a consumer alert advising  taxpayers to beware of promoters' claims that tax debts can be settled for "pennies on the dollar"  through the Offer in Compromise Program.

Some promoters are inappropriately advising indebted taxpayers to file an Offer in Compromise  (OIC) application with the IRS. This bad advice costs taxpayers money and time. An Offer In  Compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax  debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less  than full payment under certain circumstances.

"This program serves an important purpose for a select group of taxpayers. But we are increasingly concerned about unscrupulous promoters charging excessive fees to taxpayers who  have no chance of meeting the program's requirements," said IRS Commissioner Mark W.Everson. "We urge taxpayers not to be duped by high-priced promises."

If you feel your situation is so unique that an Offer in Compromise would be appropriate, feel free to contact us.  However, we feel that there will probably be another solution that will help accomplish your goals.

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