The same but different: IRS Offers in Compromise

An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS to settle a tax liability for less than the amount owed. The IRS may accept an OIC on three grounds: (1) if there’s a genuine dispute as to the existence or amount of the tax debt (doubt as to liability); (2) if there’s doubt that the amount owed is fully collectible (doubt as to collectability); or (3) if requiring payment in full would create an economic hardship or would be unfair and inequitable because of exceptional circumstances (effective tax administration). Before applying for an OIC, the taxpayer must be current on all tax returns, estimated tax payments, and federal tax deposits if applicable. Taxpayers may ask to pay the offer amount in a lump sum or in installments, and either a downpayment or first installment, each of which is nonrefundable, will be due with the application. Unlike Maryland OICs, there’s no waiting period to apply for a federal tax OIC.


More information can be found here:

https://www.irs.gov/taxtopics/tc204

https://www.irs.gov/pub/irs-pdf/f656b.pdf


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