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Legitimacy of an OIC
Many people ask is there really a program available with the Internal Revenue Service (IRS) for taxpayers to settle” their back taxes for “pennies on the dollar?” Yes, there is a program available with the IRS called the Offer in Compromise program, but not every taxpayer qualifies for it. Settlement amounts are not always for “pennies on the dollar” and depend on the facts of each taxpayer.
The Offer in Compromise is a legitimate program for “tax relief” with the Internal Revenue Service. The program allows qualifying taxpayers to resolve their federal tax liabilities for less than what they owe if they cannot afford to pay the full tax amount. Internal Revenue Code Section 7122, states that a federal tax liability may be resolved through a “compromise.” The IRS began to formalize the Offer in Compromise program when they issued policy directive [P-5-100 (February 26, 1992)] in the form of the Internal Revenue Manual (IRM) supplement. The IRS set more distinct criteria for evaluating an appropriate Offer in Compromise and integrated the Offer in Compromise into part of its collection review process. Thereafter, in 1998 Congress passed the Internal Revenue Service Restructuring and Reform Act of 1998. The intent of the Restructuring and Reform Act was to provide taxpayers with certain rights and protections in relation to the manner that the IRS collected taxes, including the opportunity for taxpayers to file an Offer in Compromise.
Since the Restructuring and Reform Act was instituted, the Offer in Compromise program has continued to evolve and will continue to evolve. The IRS attempts to standardize the acceptance criteria by issuing generalized expense guidelines, but often finds that their own guidelines overlook the uniqueness of certain taxpayer’s facts and circumstances. Thus, the IRS continues to change the criteria required for an Offer in Compromise to be accepted and continues to changes its own internal policies and procedures. The Offer in Compromise program is a viable alternative for taxpayers to resolve their back taxes if they cannot afford to pay them.
Related Links
- Offer in Compromise
- Services: Offer in Compromise
- IRS Collection Appeal Rights
- Offer in Compromise Process
Source: RoniDeutch.com
