Offer in Compromise Qualifications

Qualifying for an Offer in Compromise

The Offer in Compromise (OIC) program is accepted when it is beneficial to both the taxpayer and the tax agency. The goal of the program is to encourage future compliance with filing and payment requirements.

Taxpayers who are unable to pay the total tax liability (either via an installment agreement or as a lump sum) may be a candidate for an offer in compromise. To qualify, taxpayers must:

• Not be listed in an open bankruptcy case
• Submit the appropriate form and supporting documentation
• Pay the application fee to the tax agency
• Be in a financial position to make a lump sum offer payment or adhere to the installment payments determined by the tax authority

There are three grounds on which you may qualify for an offer in compromise:

• Doubt as to collectibility–There is doubt that the taxpayer has or ever will have enough money to pay the tax debt in full by the time it is due.
• Doubt as to liability–There is doubt that the tax is accurate.
• Effective tax administration–Though the tax is accurate and the taxpayer has the funds to pay the tax, paying it in full will cause the taxpayer significant economic hardship.

Low Income Exemption

The offer in compromise application fee may be waived and payments suspended for individuals whose income falls below the Low Income Guideline. Corporations, partnerships or other entities may not qualifiy to have this fee waived. Qualifying taxpayers should submit an additional form with their application for consideration.