Offers in Compromise

  • Former Federal Agents
  • 100 Years of Combined Experience
  • Investigations, Compliance & Defense
Chris Quick

Former Special
Agent (FBI & IRS)

Roger Bach

Former Special
Agent (DOJ-OIG & DEA)

Timothy Allen

Former Special Agent
(U.S. Secret Service & DOJ-OIG)

Ray Yuen

Former Special
Agent (FBI)

Michael S. Koslow

Former Special
Agent (DOD & OIG)

Learn Everything You Need to Know About Submitting an Offer in Compromise to the IRS

The Internal Revenue Service (IRS) offers a variety of options for taxpayers to resolve their debts without facing collection or enforcement. One of these options is the offer in compromise. If you are eligible to submit an offer in compromise, you may be able to resolve your tax debt for significantly less than you owe, and you may also be able to pay your reduced tax liabilities over time.

But, not all taxpayers are eligible to submit an offer in compromise; and, even if you are eligible, you must meet strict requirements in order to realize the benefits that are available. As a result, it is best to work with an experienced tax consultant who can help you make informed decisions and guide you through the process.

What You Need to Know About Submitting an Offer in Compromise to the IRS

If you are interested in submitting an offer in compromise to the IRS, there is a lot you need to know. Here are some of the key details:

1. Offer in Compromise Eligibility

The IRS considers offers in compromise in three primary circumstances. Broadly, you may be eligible to submit an offer in compromise if: (i) there are legitimate questions about how much you owe (doubt as to liability); (ii) there are legitimate concerns about the taxpayer’s ability to pay (doubt as to collectability); or, (iii) accepting your offer would be in the interest of effective tax administration.

If you are generally eligible to submit an offer in compromise based on the circumstances surrounding your tax debt, your next step is to determine if you meet the IRS’s specific qualifications for participating in the offer in compromise program. These include (but are not limited to):

  • You have filed all required tax returns;
  • You have made all required estimated tax payments (if any);
  • You do not have a pending or open bankruptcy proceeding; and,
  • You have obtained an extension for the current year’s tax return (if you are submitting an offer for the current year).

The IRS has published a free Offer in Compromise Pre-Qualifier tool online, and you can use this tool to conduct a preliminary assessment of your eligibility. However, before you submit an offer to the IRS, it will be important to consult with a tax consultant who can confirm your eligibility—and determine whether submitting an offer in compromise is truly the best option in light of the circumstances at hand.

2. Assessing Your Ability to Pay (and Calculating Your Offer)

Most taxpayers who submit an offer in compromise do so based on concerns about their ability to pay. While submitting an offer in compromise is also an option for taxpayers who dispute the IRS’s determination of their liability, there are other avenues for pursuing these disputes that will prove more advantageous in many cases.

As the IRS explains, submitting an offer in compromise, “may be a legitimate option if you can’t pay your full tax liability or doing so creates a financial hardship.” When assessing financial hardship, the IRS considers four primary factors:

  • Ability to pay
  • Asset equity
  • Necessary Living Expenses
  • Monthly Income

For taxpayers who are pursuing an offer in compromise, transparency is key. If the IRS has reason to believe that a taxpayer is misrepresenting its financial condition, the IRS most likely will not accept the taxpayer’s offer—and it may open an audit or investigation. At the same time, however, taxpayers must be careful not to unnecessarily disclose information to the IRS, so an informed and measured approach is essential.

As the IRS also explains, it will generally consider accepting an offer if (and only if), “the amount you offer represents the most we can expect to collect within a reasonable period of time.” In other words, reducing your tax debt through an offer in compromise is not simply a matter of throwing out a number and seeing if the IRS bites. The IRS will thoroughly evaluate your offer (and your ability to pay); and, with this in mind, it is essential to ensure that you submit an offer the IRS will be willing to consider. An experienced tax consultant should be able to assist with this as well.

3. Submitting Your Offer and Dealing with the IRS

Once you’ve assessed your eligibility (and determined that submitting an offer in compromise is the best solution for resolving your tax debt), the next step is to submit your offer to the IRS. You must be sure to choose the correct IRS form; and, at this stage, you must also decide how you plan to make your initial payment. When submitting an offer in compromise, you must either make a lump-sum initial payment equal to 20% of your offer; or, if you are proposing a payment plan with your offer, you must submit your initial installment payment at the time of your filing. After submitting your offer, you will need to be prepared to deal with the IRS—which may include demonstrating your inability to pay, negotiating the terms of your offer in compromise, or otherwise responding to questions or concerns about your offer.

Our Offer in Compromise Services

At Corporate Investigation Consulting, we provide comprehensive advice for taxpayers who are considering offers in compromise. All of the tax consultants on our team have extensive experience advising taxpayers and working with the IRS on their behalf. Our offer in compromise services include:

  • Assessing taxpayers’ eligibility and qualifications to submit an offer in compromise
  • Evaluating and documenting ability to pay and financial hardship
  • Calculating offer in compromise amounts and payments
  • Preparing and filing offers in compromise
  • Working with the IRS to secure acceptance and avoid collection

In all cases, our representation begins with a complimentary initial consultation. Our tax consultants can help you thoroughly evaluate your options, and we can help you make informed decisions about how best to resolve your tax debt with the IRS. If you decide to move forward with submitting an offer in compromise (or pursuing any other means of resolution), we will provide cost-effective representation focused on helping you secure a favorable and final resolution as efficiently as possible.

FAQs: Submitting an Offer in Compromise to the IRS

When Can U.S. Taxpayers Submit an Offer in Compromise to the IRS?

U.S. taxpayers can submit an offer in compromise to the IRS when they dispute their liability or have concerns about their ability to pay—provided that they meet the basic eligibility criteria. If you have interest in submitting an offer in compromise to reduce your tax debt, we strongly recommend speaking with an experienced tax consultant who can help you evaluate your options and choose your next steps.

Will an Offer in Compromise Reduce the Amount of My Tax Debt?

Yes, the primary purpose of submitting an offer in compromise to the IRS is to reduce the amount you owe. This is the fundamental nature of the “compromise” involved. Determining how much you can reduce your tax debt requires a careful assessment of your individual circumstances—including the current amount of your tax debt, your financial standing, and whether you have grounds to dispute the IRS’s determination of your total liability.

Can I Pay in Installments if I Submit an Offer in Compromise?

Yes, in addition to reducing the amount you owe, submitting an offer in compromise also affords the opportunity to enter into an installment agreement or payment plan. If you are interested in an installment agreement or payment plan, you must include this with your offer—and you must make your initial payment when you submit your offer as well. Our tax consultants can assist you with developing a proposed payment plan that is likely to receive approval from the IRS, and we can negotiate the terms of your plan with the IRS on your behalf if necessary.

Can I Submit an Offer in Compromise if I Already Have an Installment Agreement with the IRS?

Yes, you can submit an offer in compromise if you already have an installment agreement with the IRS. Additionally, while your offer is pending, you will not have to make payments under your existing agreement. With that said, if the IRS rejects your offer, you will still be responsible for the full amount you currently owe, so it is critical to ensure that you submit an offer that is likely to secure IRS approval.

Should I Hire a Tax Consultant to Help Me Submit an Offer in Compromise?

Due to the complexities and challenges involved, we strongly recommend hiring a consultant to help you submit your offer in compromise. At Corporate Investigation Consulting we have extensive experience working with the IRS on behalf of our clients, and we can use our experience to your advantage.

Schedule a Complimentary Initial Consultation with a Tax Consultant at Corporate Investigation Consulting

If you would like to know more about our offer in compromise services, we invite you to get in touch. To schedule a complimentary initial consultation with a tax consultant at Corporate Investigation, please call 866-352-9324 or tell us how we can help confidentially online today.

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Call 866-352-9324 or request an appointment online. We are available 24/7, and our consultants can take action immediately to protect your company.

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