Occasionally, the IRS concludes that a tax debt cannot be collected in full or there is a dispute as to what is owed. In order to resolve these tax collection and federal tax liability issues, the IRS will consider entering into an offer in compromise agreement with the taxpayer. An offer in compromise (OIC) is an alternative to concluding that a tax debt is not collectible or to a protracted installment plan agreement. Many cases handled by the IRS Appeals Division may be resolved through the offer in compromise process. If the IRS accepts the taxpayer’s offer in compromise, the tax debt would be reduced and the IRS would accept the partial payment as payment in full for the tax obligation or the IRS tax debt.
A successful offer in compromise requires extensive preparation and analysis of the IRS regulations and the specific circumstances of the taxpayer. A taxpayer who is considering entering into an offer in compromise must think about the pros and cons of making an offer, the eligibility requirements, the dollar amount of the offer, the statute of limitations on tax debt assessment and tax debt collection and how to best negotiate a successful compromise with the IRS. Even if he or she qualifies, entering into an offer in compromise is not always the taxpayer’s best option.
If you have recently received an IRS notice of tax delinquency or a tax bill and are considering settling your tax debts, contact Kamyar Mehdiyoun, tax dispute attorney in Rockville, Maryland. We are a taxation law firm specializing in tax dispute matters. We will help you find the best option for reducing your tax obligations.