Tax Offer in Compromise

An Offer in Compromise (OIC) is an application to the IRS on behalf of a troubled taxpayer who owes a substantial tax debt and has little or no hope of repaying it over their lifetime. 

The Offer program has complicated formulas between a taxpayer’s assets and their monthly income, ending up with a dollar amount offered to the IRS to satisfy a taxpayer’s tax debt. The program can take up to two years to negotiate with the IRS.

Offer Program Saves Taxpayers Money

• Future income: The IRS calculates the taxpayer’s future income over 24 months. 
• Student loans & state taxes: The program allows taxpayers to deduct some if not all of their student loan repayments and state tax repayments for purposes of the Offer.
• Cash: OICs typically include cash as an asset which may increase the amount required to be offered to the IRS. But taxpayers can have some cash in the bank not included in the Offer.
• Cars: The OIC program allows $3,450 per car to be excluded from the Offer. And they allow even more deductions for an old car with high mileage.
• Business assets: The IRS does not require assets in a business to be included in an OIC asset calculation. For many taxpayers, such as truck drivers, contractors, and other taxpayers with expensive business assets, this reduces the amount of the Offer dramatically.

Reducing Tax Debt

For a typical client, the tax debt ranges from $10,000 up, very often from $100,000 to $1.0+ million. The Offer amounts to settle old taxes have been as low as $500 to the IRS. Typically, the offered amount is a fraction of the total tax debt resulting in the frequent comment about solving a tax problem for “pennies on the dollar.” The Law Office of Lori Silver has an excellent batting average doing Offers in Compromise, with great results for taxpayers needing help.