IRS has provided updated instructions to taxpayers with respect to the effects of coronavirus – COVID-19 on offers in compromise (OICs).
IRS has the authority to compromise a taxpayer’s tax liability. An OIC is an agreement between the taxpayer and IRS that compromises a taxpayer’s tax debt for less than the full amount owed. IRS will accept an OIC when it is unlikely that the tax liability can be collected in full and the amount offered by the taxpayer reasonably reflects the taxpayer’s collection potential. The goal of an OIC is to collect what is potentially collectible at the earliest possible time and at the least cost to the government.