Offer in Compromise

What is an Offer in Compromise?

Do I Qualify for an Offer In Compromise Tax Relief Settlement?

This is a difficult question to answer without knowing the facts of your case.  We will always complete a preliminary review of your finances and a detailed review of your IRS account before accepting your case. This ensures a high likelihood of success and is done upfront at no cost or obligation to you.  In this review for the Offer in Compromise program we will also provide you the Collection Statute Expiration date on your accounts because if this date is near it’s best not file an Offer in Compromise and let the debt expire. 

CTC knows what “red flags” to look for when considering an Offer in Compromise and will provide other options if an Offer in Compromise is not possible.  This financial review and in depth tax debt analysis separates us from other IRS tax relief firms.  It also keeps our acceptance rate for the Offer in Compromise program at the highest level and our Better Business Bureau complaints at zero.

Can businesses file an IRS Offer in Compromise?

The IRS has an Offer in Compromise for businesses called the In-Business Offer in Compromise. This is the most difficult Offer in Compromise to negotiate and will require the help of an experienced Tax Attorney. The main difference between a personal Offer in Compromise and an In-Business Offer in Compromise is the requirement that the business be 100% current and compliant with all IRS tax obligations for two full quarters prior to submitting the Offer in Compromise.

How long does an IRS Offer in Compromise take?

A tremendous amount of tax debt savings available through the Offer in Compromise, but it is a strenuous tax debt relief strategy.   It can take from three to nine months to successfully negotiate an IRS Offer in Compromise.  Your assistance in collecting necessary documentation is required to get your IRS Offer in Compromise accepted as quickly as possible.

How is an Offer in Compromise Calculated?

Your Offer in Compromise tax settlement is calculated using a complex formula taking into account the equity in your assets and projected future income.  We have prepared a Free Offer in Compromise Guide that you can download on this site which provides more Offer in Compromise guidance.

How long will I have to pay my Offer in Compromise Settlement?
The length of time given a Taxpayer to pay off their Offer in Compromise settlement depends on which settlement option the Taxpayer chooses.   There are three options for repaying an Offer in Compromise tax settlement. 

• Cash Offer in Compromise.  Tax debt settlement amount must be paid within 90 days of acceptance.
• Short Term Deferred Offer in Compromise.  Tax debt settlement must be paid over 24 months.
• Long Term Deferred Offer in Compromise.  Tax debt settlement must be paid off over 60 months.

Will Interest and Penalties accrue if I choose Deferred Payment Offer in Compromise?

Yes and no.  The total debt (The Dollars) is put in limbo while the IRS waits to see if you complete your end of the Offer in Compromise bargain and will continue to accrue P&I.  If you fail to meet your obligations under the Offer in Compromise the total debt will be reinstated along with the accrued P&I.  But the Offer in Compromise settlement amount (The Pennies) will not accrue P&I even if you choose a deferred payment.

Will an IRS Offer in Compromise appear on my Credit Report?

No an Offer in Compromise will not appear on your credit report.  The Offer in Compromise has none of the negative ramifications of filing bankruptcy.  Although the Offer in Compromise does not appear on your credit report the IRS Tax Lien may already be filed which will definitely damage your credit score.  Once the Offer in Compromise negotiation is complete and the tax settlement is paid in full the IRS tax lien will be released and listed as paid in full.

Offer in Compromise versus Bankruptcy

There are many advantages of the Offer in Compromise over bankruptcy.  Most, IRS tax liabilities, such as employment taxes, estimated tax assessments and recent personal income taxes are not dischargeable in bankruptcy.  A bankruptcy will stop IRS enforcement, but so will an Offer in Compromise.  Also, you can complete an Offer in Compromise without ever going to Court.  The IRS Offer in Compromise is strictly administrative so even the appeal of a rejected Offer in Compromise can be handled over the phone. There are times when a bankruptcy is more effective than an IRS Offer in Compromise, like when there are general creditor liabilities, the taxes liabilities are dischargeable or there’s a reason the Offer in Compromise will not work for you.

What is an Effective Tax Administration Offer in Compromise?

The Effective Tax Administration (ETA) Offer in Compromise is similar to the regular offer in compromise in that your tax liability will be compromised and as long as you live up to your end of the Offer in Compromise the tax debt will be forgiven.  The main difference between an ETA and regular Offer in Compromise is that the IRS will accept the Taxpayer’s Offer in Compromise even if the Taxpayer has sufficient equity in his or her assets to pay the IRS, provided the Taxpayer needs those assets to meet his or her basic living requirements. This Offer in Compromise program is mainly for elderly or disabled Taxpayers.

What is a Doubt as to Liability Offer in Compromise?

A Doubt as to Liability Offer in Compromise is utilized when the Taxpayer does not believe they actually owe the back tax liability.  As opposed to the traditional Doubt as to Collectability Offer in Compromise where the Taxpayer is contending they can’t pay the tax debt in full, in a Doubt as to Liability Offer in Compromise the Taxpayer is contending they don’t owe the back tax liability to begin with.   There are two types of Doubt as to Liability Offer in Compromises:

• Examination issue Doubt as to Liability Offer in Compromise.  These arise when a Taxpayer believes that a mistake was made in examination that resulted in a tax liability.
• Legal or factual issue Doubt as to Liability Offer in Compromise.  The most common Offer in Compromise submitted under these grounds will be in response to a Trust Fund Recovery Penalty Assessment.  Here the Taxpayer’s Offer in Compromise will lay out both legal and factual grounds why their assessment of the Trust Fund Recovery Penalty was improper.

New rules and the Offer in Compromise Program

The Tax Increase Prevention and Reconciliation Act took effect July 16, 2006 changing many Offer in Compromise procedures.  The IRS now requires Offer in Compromise applicants to make payments towards the proposed Offer in Compromise as the Offer in Compromise processes.  If you propose a lump sum payment Offer in Compromise you will have to send in 20% of that proposed offer amount with the initial Offer in Compromise package.  If you propose an extended payment Offer in Compromise, i.e., you propose to pay the Offer in Compromise settlement over time (24 or 60 months) then you must send payments as proposed while the IRS considers your Offer in Compromise.  If the IRS rejects your Offer in Compromise they will keep the payments you made during Offer in Compromise processing and apply them to your total balance due.  The only pro-taxpayer change to the Offer in Compromise program was that any Offer in Compromise properly submitted and processed by the IRS will be accepted if not returned or rejected within 24 months.

I think I qualify for an Offer In Compromise Tax Relief Settlement:

If you think you qualify for relief of your tax debt through the IRS Offer in Compromise settlement we encourage you to call, e-mail or complete the secure online tax consultation request.  The Offer in Compromise is an excellent way to achieve a tax debt settlement and get into compliance with the IRS, but confirming your eligibility is a mandatory first step before pursuing the Offer In Compromise program for IRS tax debt relief.

I’m not sure if I qualify for an Offer In Compromise but would like more guidance for free:

Please download our free self-help guide to the IRS Offer in Compromise program.  You must enter an e-mail address for delivery but you will not be called unless requested.