First, the IRS can accept a compromise if there are doubts about liability. A commitment meets this criterion only when there is a genuine dispute over the existence or amount of the correct tax debt under the law. Second, the IRS can accept a commitment if there is doubt that the amount owed is fully collectible. Use this tool to see if you are eligible for a transaction offer (OIC).
Enter your financial information and tax return status to calculate the amount of the preliminary offer. We made our final decision based on your full OCI request and our associated investigation. This tool should only be used as a guide. While you can show that you can pay your liability in full, you can still submit a transaction offer and discuss your individual financial situation with the IRS.
If you are a corporation, corporation, or reside in a U.S. territory If you are a foreign country, or are you military personnel using an APO or FPO address, the OIC Prequalifier does not apply to your situation. Proceed to the request contained in the commitment offer booklet. Taxpayers who don't meet these estimates may find that they don't qualify or that they're being offered a higher offer amount that they can't afford in the future.
Assets and income will be considered to the extent that the taxpayer and the non-responsible spouse can demonstrate that any additional amount would have a material and adverse effect on the standard of living of them and their dependents. A “compromise offer” is a little-known but remarkably effective way for thousands of people with problems with the IRS to routinely eliminate tens of thousands of dollars in tax debts. There are alternatives for people who can't pay their taxes and don't qualify or can't use the OCI option. There is no legal right for the IRS to reduce a valid tax bill; it's entirely a matter of government discretion.
The latter of which is only considered in exceptional circumstances or if the taxpayer would otherwise be exposed to economic difficulties. In recent years, up to 40% of the ICOs filed were accepted by the IRS, a relatively high percentage compared to previous years. They may have equity in assets or future income that can pay their tax bills before the tax collection law expires. If the IRS rejects your offer, you have the right to appeal or meet with an appellate technician to review IRS actions to resolve the tax liability.
If you qualify for something known as a transaction offer, known as an offer or OIC, the IRS will accept less than the amount a taxpayer owes on a tax bill and cancel it. I'll also warn you right from the start that this isn't an easy process and that the percentage of ICOs that are actually accepted by the IRS is quite low. Well, the IRS has always heard that excuse, so you have to make a very convincing case and I have presented what conditions constitute financial difficulties. You must comply with all your taxes for five years for the OCI to be final, and even a small mistake gives the IRS the right to revoke the agreement and demand full payment of the liability it thought it had avoided.
The IRS can return your offer after processing it, if you don't file your tax returns on time, doesn't make estimated tax payments, properly adjust your tax withholding, or making federal tax deposits. If the IRS processes but closes your offer without accepting it, it will not refund the application fee or any other payment you made with the offer.