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How to Qualify for an Offer in Compromise Program

Offer in Compromise Qualification

If you owe taxes but you cannot afford to pay off your entire debt, you can try to qualify for an Offer in Compromise.  While working with a tax attorney, you can make an offer to the IRS stating what you can afford to pay – typically for less than what you owe.

The IRS may accept this offer because it will at least give them a portion of the debt owed instead of risking you not being able to make any payments at all.  Find out how a tax attorney can help you qualify for an Offer in Compromise.

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Key Insights We Will Discuss

  1.  How to demonstrate financial hardship to the IRS
  2. Why you cannot have a pending bankruptcy to qualify for an Offer in Compromise
  3. Why you must be current on your tax returns to apply
  4. Why you cannot have an open tax crime case when applying for an Offer in Compromise

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You Must Prove You Cannot Afford to Pay the Entire Tax Liability

To qualify for an Offer in Compromise (OIC), the IRS states that an applicant must prove that he or she cannot afford to pay the owed tax liability.  To do this, you should work with a tax attorney to determine which forms should be submitted to the federal agency to prove your financial status.  The IRS recommends that if you are unable to prove that you cannot afford to pay the tax debt,  that you instead pursue a payment plan to make the tax payments more affordable.

You Cannot Have a Pending Bankruptcy

If you are in the middle of bankruptcy proceedings, you cannot apply for an Offer in Compromise.  Instead, you should address your tax debts as part of the bankruptcy process.

You Must Be Current on Your Tax Returns

Before you can apply for an Offer in Compromise, the IRS requires that you be current on all required tax returns.  If you have unfiled returns, work with your tax attorney to get the past returns submitted.  Even if you cannot afford to pay the taxes due, you must still submit them before applying for the Offer in Compromise program.

You Cannot Be Under Investigation by the Department of Justice

If you are currently being investigated for a possible tax crime, you cannot apply for an Offer in Compromise for any returns on the years that are part of the investigation.  Instead, work with your attorney to determine how to proceed with your tax liability.

Contact an Attorney

If you want to apply for an Offer in Compromise, call Ayar Law at 800.571.7175 to receive free, no-obligation tax advice from a tax attorney.

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Executive Summary:

  • To qualify for an Offer in Compromise, you must demonstrate to the IRS that you are unable to pay the tax liability
  • You must be current on your tax returns before applying for an Offer in Compromise
  • You cannot be in bankruptcy proceedings or under criminal investigation when applying for an Offer in Compromise
  • Contact Ayar Law to get free, no-obligation legal advice at 800.571.7175

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Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.