Offer in Compromise (OIC)
An Offer in Compromise (OIC) is a formal agreement between a taxpayer and the IRS that settles the taxpayer’s debt for less than the full amount owed. It allows taxpayers who cannot afford to pay their delinquent tax liability the opportunity to settle permanently for a reduced amount. If an OIC is not prepared or submitted correctly or if the taxpayer is not in compliance, the IRS can and will reject an OIC.
The IRS offer in compromise formula works like this: The IRS will figure out how much they think you can pay them every month in an installment agreement. They do this by asking for your pay-stubs or, if you are self-employed, a recent profit and loss statement from your business.
We consider your unique set of facts and circumstances:
Ability to pay;
Select a payment option, Your initial payment will vary based on your offer and the payment option you choose:
Lump Sum Cash: Submit an initial payment of 20 percent of the total offer amount with your application. If your offer is accepted, you will receive written confirmation. Any remaining balance due on the offer is paid in five or fewer payments.
Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.
If you meet the Low Income Certification guidelines, you do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer. See your application package for details.