Is an Offer in Compromise Right for You?

Should the IRS determine that a taxpayer is unable to pay the liability in a lump sum or through an installment agreement, and has exhausted the search for other payment arrangements; the last option would be to file an Offer in Compromise (OIC).

An OIC allows taxpayers to settle their tax liabilities for less than the full amount. Taxpayers should use the checklist in the Form 656, Offer in Compromise, package to determine if they are eligible for an offer in compromise (OIC). The objective of the OIC program is to accept a compromise when it is in the best interests of both the taxpayer and the government and promotes voluntary compliance with all future payment and filing requirements. See IRS Policy Statement P-5-100 for the complete OIC policy statement.

The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), created major changes to the IRS OIC program as it relates to lump-sum offers, periodic payment  offers, and a determination as to when an offer is accepted. Read more at irs.gov