If you are able to pay your tax debt in full, and an installment agreement is not an option, then the Offer in Compromise might be best option for you. An OIC is an agreement between you and the IRS or state that resolves your tax debt for less than the amount owed so you can achieve a reasonable tax settlement. If taxpayers can fully pay the liabilities through an installment agreement or other means, they, in general, won’t qualify for the OIC. So, the OIC should be used as a last resort when other options have been exhausted.

To qualify for an OIC, the taxpayer and his/her tax specialist must have filed all returns, made all required estimated tax payments as well as quarterly tax deposits, if applicable. In most cases, the IRS won’t accept an OIC unless the amount that the taxpayer can pay is equal to or greater than the reasonable collection potential (RCP). The RCP is how the IRS measures the taxpayer’s ability to pay, and includes value that can be realized from the taxpayer’s assets and anticipated future income.

Settle your Tax debt once and for all with the Offer in Compromise program.

A tax debt can be legally compromised for any of the following reasons:

  • Doubt as to liability: doubt exists that the assessed tax is correct
  • Doubt as to collectibility: doubt exists that you could ever pay the full amount of tax owed
  • Effective tax administration: there is doubt that the tax is correct, and no doubt that the amount owed could be collected, but an exceptional circumstance exists that allows the IRS to consider a taxpayer’s OIC

If the Creative Tax Solutions team can prove that you qualify for the OIC program, you will hopefully be able to decrease owed dollars in taxes, penalties and interest. It is important to note that many non-tax professionals do not have the know-how to process an OIC correctly, as many forms are filled out incorrectly or, once processed, they are rejected. To resolve the matter as efficiently and quickly as possible, it is the best idea to seek a team who has successfully secured several OIC programs on their clients’ behalf.

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