Offer in Compromise - Pros and Cons

The Offer In Compromise (OIC) can be an effective means of reducung the amount of tax liability (back tax debt and tax penalties) owed, however should your OIC be accepted by the IRS there are both positives and negatives the taxpayer should be aware of.

Offers In Compromise - Pros

The best qualities of the Offer In Compromise are as follows: they allow a taxpayer in some cases to settle thier taxdebt for less or sometimes even much less than the original amount owed. Many times an offer in compromise is the only avenue availale to a troubled federal tax payer to bring any meaningful relief from a large debt. However an OIC willonly be approved underspecific circumstances and it s very highly recomended a taxpayer consult with an IRS Tax Lawyer to learn if the OIC is the best action the taxpayer should take in their IRS defense.

To Qualify for an Offer In Compromise a taxpayer must establish to the IRS the following:

The Taxpayer Has No Possible Means Of Paying The Amount Owed

The IRS has made a mistake and the taxpayer does not actually owe the amount the IRS has assessed.

The Pros on a successful Offer in Compromise include:

A way to end a lengthy and extremely stressful financial problem and get on with life

Durring the Offer In Compromise Negotiation process the IRS will actually suspend collections activity

The Offer In Compromise allows a taxpayer to stay out of bankruptcy and can even allow the taxpayer to dischard taxes that would normally not be reducable

A reduced amount, sometimes even a significantly reduced amount is payed rather than the full amount of the original tax liability

If an Offer In Compromise has been accepted the IRS will lift any tax liens from the taxpers property.

Offers In Compromise - Cons

In general the positives outweigh the negatives however should the IRS accept your OIC there are negatives you must be aware of including:

For an Offer In Compromise that is based on doubt as to collectability, the taxpayer must make a full finacial disclosure to the IRS - this can be an invasive, intimidating and unpleasent process if the taxpayer chooses to go it alone without a qualified tax attorney

Should you OIC be accepted some tax benefits will have to be waived

State taxes or other debts are not resolved by an Offer In Compromise with the IRS

A taxpayers OIC is kept in the public records for a year or more

Some tax credits and refunds will have to waived

For a period of five years from the Offer In Compromise the tax payer aggrees to stay current with all of thier tax responsibilities and obey all federal laws - failure to do so can negate the OIC and the taxpayer can be responsible for the original amount once again

About the Author

As a dedicated IRS Tax Lawyer Mary has been helping clients get tax debt relief by negotiating currently non-collectible status, offers in compromise, installment agreements, innocent spouse cases, audits, removing levies, releasing liens, and negotiating penalty abatement. Mary's career as a IRS tax attorney began in 1993 after graduating from Stetson University College of

Author (getmejustice). Submitted on Sat, 23 Jul 2011 Time: 5:54 PM

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