Offer in Compromise – OIC tax settlement

Dealing with tax debt is stressful, especially because of the aggressive methods IRS tends to employ for collecting the taxes owed to the government.

These range from assessing multiple penalties on late payments, levying your bank accounts, garnishing your wages and sending an IRS Revenue Officer to padlock your business, to forcing your employer to sign into wage garnishments and deducting a sizable percentage of your pay the IRS.

The Benign Side of IRS

After all that I mentioned earlier, can you believe that it is possible to convert the IRS from a tax guzzling machine (bent on eking every last penny of the taxes owed to it) to a benign institution willing to waive off a large portion of your tax debt?

It’s called an Offer in Comprise, and with help from a professional enrolled agent or tax resolution attorney, you can do that!

What is an Offer in Compromise?

An Offer In Compromise (aka OIC) is an agreement between the IRS and the taxpayer. OIC resolves your tax debt. It relies on the IRS’s authority to settle, or ‘compromise’ a taxpayer’s debt by accepting less than the full payment.

All good news, yes, but there are certain circumstances that need to be carefully met.

When does IRS Compromise a Tax Debt?

The IRS can legally compromise your debt in for any of the following three reasons:

Doubt as to Collectibility

If there is doubt that the tax, penalties, and interest assessed on the taxpayer may be collected in the foreseeable future through the normal collection procedures of the IRS. The IRS can further ask the following:

  • Will the IRS be able to collect more with forced collection methods compared to accepting the OIC? The IRS is thinking like a business and wants to know which way it can save more money?
  • Will it be feasible to let the taxpayer’s financial condition to improve over time and collect the taxes in the future?
  • The taxpayer has no or limited assets and negative or limited cash flow and disposable income.

Doubt as to Liability

If doubt exists that the taxpayers assessed tax liability is correct. Reasons for this could range from an error made by the examiner while interpreting the tax code or failed to use all the support and evidence that the taxpayer presented,  to the taxpayer having newer documents to prove that the tax amount they were assessed was incorrect.

Effective Tax Administration

In case no doubt exists to the amount that is owed by the taxpayer, but circumstances exists where IRS’s collection of the owed tax will create financial hardships or be deemed as unfair and inequitable to the taxpayer.

If a taxpayer meets any of these three circumstances by creating and substantiating a strong case, the chances of them being eligible to receive an OIC settlement are very high.

Ending NOTE

Thought the above three circumstances are sufficient for becoming eligible for OIC, the IRS looks at certain other conditions as well. These include:

  • Your are not going through bankruptcy
  • Your have filed all federal tax returns required for prior years
  • You have paid any estimated taxes for current year
  • Have provided the proper offer in compromise documentation

Mike Habib, EA, specializes in analyzing taxpayer circumstances and negotiating back tax cases that conclude in the right OIC settlement for our clients. For further information, feel free to contact us 1-877-788-2937.

Client Reviews
★★★★★
Mike has given us peace of mind! He helped negotiate down a large balance and get us on a payment plan that we can afford with no worries! The stress of dealing with the IRS is huge and Mike helped us through it all. The peace of mind is invaluable, thank you Mike!April S.
★★★★★
Mike Habib - Thank you for being so professional and honest and taking care of my brothers IRS situation. We are so relieved it is over and the offer in compromise process went just as you said. Mike is very professional and will give you honest answers to the OIC process and you can really trust him. You won't be sorry you chose him!Joe and Deborah V.
★★★★★
Mike is a true professional. He really came thru for me and my business. Dealing with the IRS is very scary. I'm a small business person who works hard and Mike helped me see that they are not that scary after all. He was always there with the answers I needed and was very good about calling me back which I appreciated since your first reaction is to freak out and ask a million questions. He solved a messy case and worked very hard to resolve it. His rates are VERY reasonable for the amount of work he does! I give him my highest recommendation!Marcie R.
★★★★★
Mike was incredibly responsive to my IRS issues. Once I decided to go with him (after interviewing numerous other tax professionals), he got on the phone with the IRS immediately (as in the same day I signed with him) to squash an impending issue. And he worked directly with them to quickly come to a resolution I am very happy with. I'd highly recommend reaching out to Mike to see if he can help you with any IRS issues. I'm very satisfied!Marshall W.
★★★★★
I’ve seen and heard plenty of commercials on TV and radio for businesses offering tax help. I did my research on many of them only to discover numerous complaints and unresolved tax issues. I found Mike Habib through my own online search and contacted him. He was very professional with great communication, always answering my questions and concerns. Mike resolved my complicated tax problem just as he said he would. I would definitely recommend his services to family and friends.Nancy & Sal V.

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