Frequently Unasked Questions: IRS Offer In Compromise

12:10 PM Jamaal Solomon 0 Comments Category :

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There are many times that people with tax problems are too scared to ask the real questions. Now, if you contact the wrong accountant, the accountant could use this to his advantage and sell you a dream. For example, if an accountant sells you the "pennies on the dollar" dream without looking into your financials, non-financial background (i.e. health, age) and compliance history then RUN! Today's post will be about what I believe that taxpayers should know about the IRS Offer In Compromise program. This post will be general and short. It will be up to you to do some more research or have an discussion with a qualified tax professional such as myself.


FACT #1: Beginning with Offer applications received on or after March 27, 2017: The IRS will return any newly filed Offer in Compromise application if you have not filed all required tax returns. Any application fee included with the OIC will also be returned. Any initial payment required with the returned application will be applied to reduce your balance due. This policy does not apply to current year tax returns if there is a valid extension on file.

Stikks' (that's me!) Tip: make sure you filed all of your tax returns before you go to a tax professional. This WILL save you a lot of time and money in the tax professional's proposed fees.

FACT #2: The IRS considers your unique set of facts and circumstances:

  • Ability to pay
  • Income
  • Expenses
  • Asset equity

Stikks' Tip: please don't think you are smarter than the IRS and don't report your assets. You will be surprised how the IRS can locate all of your assets. In addition, the IRS has no problem creating a list of the assets that you failed to disclosed.

Stikks' Tip: realize that the IRS looks beyond you current financial situation. Therefore, don't believe since you are currently broke that the IRS will give you a favorable decision.

FACT #3: Your initial payment will vary based on your offer and the payment option you choose:

Lump Sum Cash: Submit an initial payment of 20 percent of the total offer amount with your application. Wait for written acceptance, then pay the remaining balance of the offer in five or fewer payments.

Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.

Stikks' Tip: don't expect the IRS to wipe off your entire debt. Try to be more realistic with your offer. Remember that IRS doesn't have to agree to your offer.

FACT #4: While your offer is being evaluated:

  • Your non-refundable payments and fees will be applied to the tax liability (you may designate payments to a specific tax year and tax debt);
  • A Notice of Federal Tax Lien may be filed;
  • Other collection activities are suspended;
  • The legal assessment and collection period is extended;
  • Make all required payments associated with your offer;
  • You are not required to make payments on an existing installment agreement; and
  • Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date
Stikks' Tip: Understanding the process can eliminate a lot of headaches. Don't rush to complete the application until you understand the basics.

Need help? Don't be scared! Email me at



Name: Jamaal Solomon