Tax Law | Offer in Compromise

An offer in compromise (OIC) is one method of settling an existing IRS or California Franchise Tax Board (FTB) tax debt. It is an agreement between the IRS and/or FTB and the taxpayer that allows the taxpayer to pay less than the full amount owed or "pennies on the dollar."

If you cannot pay your debt in full or if doing so would cause financial hardship, you might qualify for an OIC. The IRS and/or FTB will accept an OIC if they believe that the amount offered by the taxpayer is more than what they could collect through their regular collections process. Basically, the IRS and/or FTB would rather receive some money as opposed to no money at all. 

Although there is no legal right to a tax bill reduction, both the IRS and/or FTB must fairly consider an OIC that has been properly submitted. However, even with a properly submitted application, the rejection rate of OICs is around 75% as the process is extremely complicated. 

If your OIC is rejected, you will face a new host of problems. The IRS and/or FTB now have a full disclosure of your financial information which only speeds up their collection efforts against you. Furthermore, interest is accruing during the OIC process and a delayed or rejected OIC only increases the amount of money owed to the IRS and/or FTB. 

Therefore it is important to make sure that your OIC packet is properly prepared and efficiently submitted the first time around. A skilled tax attorney such as ourselves can help you quickly and successfully prepare, submit, and negotiate a settlement amount for substantially less than your full amount due. 

To learn more about whether you would qualify for an OIC or other tax debt relief options, please don't hesitate to contact us