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Offer In Compromise

Definition

The Offer in Compromise program, in the United States, is an Internal Revenue Service program under which allows qualified individuals with an unpaid tax debt to negotiate a settled amount that is less than the total owed to clear the debt. A taxpayer uses the checklist in the Form 656, Offer in Compromise, package to determine if the taxpayer is eligible for the offer in compromise program. The objective of the OIC program is to accept a compromise when acceptance is in the best interests of both the taxpayer and the government and promotes voluntary compliance with all future payment and filing requirements.

What is 'Offer In Compromise'

A program offered by the IRS to taxpayers who are unable to pay their tax debt. Those who qualify are allowed to make an offer in compromise, which is an offer to pay a lesser amount than that which is owed. The offer in compromise program is intended to allow taxpayers with substantial back taxes to settle their tax debt and start over with a clean slate, so that they can remain current on their taxes in the future.

Explaining 'Offer In Compromise'

Taxpayers can find out whether they are eligible for an offer in compromise by consulting the checklist on Form 656 of the offer in compromise IRS package. In order to qualify, taxpayers must fall into at least one of the following three categories:

1) Uncertain Liability - Is tax really owed?
2) Uncertain Collectability - Taxpayer has no way to pay this debt.
3) Economic Hardship - Taxpayer must prove that paying the debt would be unfair or create further hardship.

According to the IRS, taxpayers should beware of promoter's claims that tax debts can be settled for "pennies on the dollar."


Further Reading


Getting More by Asking Less: Justifying and Reforming Tax Law's Offer-in-Compromise Procedure
heinonline.org [PDF]
… Manual lists a number of factors to consider in determining whether economic hardship exists and … to compromise her tax liability under the OIC procedure must submit her offer on IRS … tax liabilities, the grounds for the compromise request, the proposed compromise amount, and …

The economics of Islamic finance and securitizationThe economics of Islamic finance and securitization
jsf.pm-research.com [PDF]
… Manual lists a number of factors to consider in determining whether economic hardship exists and … to compromise her tax liability under the OIC procedure must submit her offer on IRS … tax liabilities, the grounds for the compromise request, the proposed compromise amount, and …

Presidential address: The scientific outlook in financial economicsPresidential address: The scientific outlook in financial economics
onlinelibrary.wiley.com [PDF]
… Manual lists a number of factors to consider in determining whether economic hardship exists and … to compromise her tax liability under the OIC procedure must submit her offer on IRS … tax liabilities, the grounds for the compromise request, the proposed compromise amount, and …

Computing efficient financial strategies: An extended compromise programming approachComputing efficient financial strategies: An extended compromise programming approach
www.sciencedirect.com [PDF]
… Manual lists a number of factors to consider in determining whether economic hardship exists and … to compromise her tax liability under the OIC procedure must submit her offer on IRS … tax liabilities, the grounds for the compromise request, the proposed compromise amount, and …

Participatory politics, social cooperation, and economic stabilityParticipatory politics, social cooperation, and economic stability
pubs.aeaweb.org [PDF]
… Manual lists a number of factors to consider in determining whether economic hardship exists and … to compromise her tax liability under the OIC procedure must submit her offer on IRS … tax liabilities, the grounds for the compromise request, the proposed compromise amount, and …

Share issue privatizations as financial means to political and economic endsShare issue privatizations as financial means to political and economic ends
www.sciencedirect.com [PDF]
… Manual lists a number of factors to consider in determining whether economic hardship exists and … to compromise her tax liability under the OIC procedure must submit her offer on IRS … tax liabilities, the grounds for the compromise request, the proposed compromise amount, and …

Does financial development cause economic growth? Time-series evidence from 16 countriesDoes financial development cause economic growth? Time-series evidence from 16 countries
www.sciencedirect.com [PDF]
… Manual lists a number of factors to consider in determining whether economic hardship exists and … to compromise her tax liability under the OIC procedure must submit her offer on IRS … tax liabilities, the grounds for the compromise request, the proposed compromise amount, and …

An Offer in Compromise You Can't Confuse: It Is Not the Opening Bid of a Delinquent Taxpayer to Play Let's Make a Tax Deal with the Internal Revenue ServiceAn Offer in Compromise You Can't Confuse: It Is Not the Opening Bid of a Delinquent Taxpayer to Play Let's Make a Tax Deal with the Internal Revenue Service
heinonline.org [PDF]
… Manual lists a number of factors to consider in determining whether economic hardship exists and … to compromise her tax liability under the OIC procedure must submit her offer on IRS … tax liabilities, the grounds for the compromise request, the proposed compromise amount, and …

An Offer in Compromise May Offer Tax Relief to Financially Troubled TaxpayersAn Offer in Compromise May Offer Tax Relief to Financially Troubled Taxpayers
search.proquest.com [PDF]
… Manual lists a number of factors to consider in determining whether economic hardship exists and … to compromise her tax liability under the OIC procedure must submit her offer on IRS … tax liabilities, the grounds for the compromise request, the proposed compromise amount, and …


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