Understanding the IRS Offer in Compromise Program: A Path to Resolving Tax Debt
What is an Offer in Compromise?
An Offer in Compromise is an arrangement between a taxpayer and the IRS that allows the taxpayer to settle their tax debt for less than the full amount owed. It provides a legitimate opportunity for eligible taxpayers to find a compromise and achieve financial relief. The IRS evaluates each case individually, considering the taxpayer’s ability to pay and their unique circumstances.
Objectives of the OIC Program:
The OIC program serves several objectives, including:
Providing a fresh start:
The IRS aims to help financially struggling taxpayers by giving them a chance to resolve their tax debt and regain their financial stability.
Efficient tax collection:
The program facilitates the collection of taxes owed by allowing taxpayers to settle their debts through mutually agreeable terms.
Encouraging compliance:
By offering a viable resolution option, the OIC program encourages taxpayers to meet their future tax obligations and remain compliant.
Benefits of Pursuing an OIC:
Reduced tax debt:
Customized payment plan:
The OIC program takes into account the taxpayer’s financial situation, allowing for a tailored payment plan based on their ability to pay.
Resolution and closure:
Once accepted, an OIC brings closure to outstanding tax liabilities, providing relief from the stress and burden of unresolved tax debt.
Potential Drawbacks to Consider:
Rigorous evaluation and documentation:
Risk of rejection:
Disclaimer:
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Karla Navarro, EA, CTRC
Founder and principal Enrolled Agent at My Tax Problems Solved. Karla brings a deep well of expertise and a commitment to precision in tax representation to the team.
