What is an Offer in Compromise?
We are the Colorado Springs IRS help experts. We have helped many people in your situation. An “Offer in Compromise” is a little-known but remarkably effective way that thousands of people in trouble with the IRS routinely eliminate tens of thousands of dollars in tax debts. It is a federal program that allows you to settle your tax debt for less than the full amount you owe. Sometimes significantly less, especially if you are from a low-income family.
Colorado Springs IRS Help
Can You Really Settle Your Tax Debt with the IRS for Pennies on the Dollar?
Yes you can, in cases where a taxpayer clearly does not have the assets and/or income to pay off the tax debt in a reasonable time.
An offer in compromise–“OIC”–is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS will accept your OIC only if you convince it that:
- you aren’t able to pay the full amount in a reasonable time, either as a lump sum or over time through a payment agreement
- there is doubt as to the amount of your tax liability (unusual), or
- due to exceptional circumstances, payment in full would cause an “economic hardship” or be “unfair” or “inequitable”– for example, you can’t work due to health problems, or you’d be left with no money to pay your basic living expenses if you sold your assets to pay your tax bill in full.
To make this determination, the IRS looks at your income and assets to determine your “reasonable collection potential (RCP).”
Need IRS debt forgiveness? Consider an offer in compromise.
If you have a tax bill you can’t afford to pay, you may be tempted by ads from companies that promise to broker total IRS debt forgiveness on your behalf. But complete forgiveness of tax liability outside of bankruptcy is very unlikely. An offer in compromise may be a more realistic option.
When you owe more federal income tax than you can afford to pay, you may hope for IRS debt forgiveness.