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How to Get an Offer in Compromise Approved  

In order to get an Offer in Compromise (OIC) approved by the IRS, you will need to meet at least one of three following conditions: there is doubt as to your liability, there is doubt as to your collectibility, or that approving it promotes effective tax administration. An OIC is approved when the IRS determines that it is in the best interest of the IRS and the taxpayer to settle the tax debt for less than what is owed. Note that it is not easy to get an OIC approved by the IRS, as the IRS generally prefers to collect every dollar it can from taxpayers.  

Qualifications for IRS Approval of the OIC 

In order for the IRS to even consider your Offer in Compromise, you will need to meet each of the following preliminary requirements:  

  • You do not have any open bankruptcy proceedings 
  • You have already filed all federal tax returns required 
  • If you are a business owner, you have made all of your required estimated tax payments for that current year 
  • If you are self-employed and you have employees, you have already submitted every required federal tax deposit 
  • There are no open tax audits or innocent spouse claims against you  
  • Your case involving liabilities in the OIC have not already been referred to the Department of Justice by the IRS
  • If you meet all of the criteria above, then you may submit an OIC to the IRS. The offer will need to satisfy of the three requirements:  

Doubt as to Your Liability 

For the IRS to find that there is a doubt as to your liability, there must be a genuine dispute about either whether any debt is owed at all or that the amount of the tax debt is incorrect. Supporting documentation must be provided as well as a written statement explaining the inaccuracy.  

Doubt as to Your Collectibility  

Here, the taxpayer is not disputing the amount owed, but is essentially saying that he or she is unable to pay the full amount owed. In order to determine whether or not to approve your OIC for this reason, the IRS will thoroughly examine your income, assets, and living expenses.  

Effective Tax Administration  

In order to get your OIC approved under this element, you must convince the IRS of one of the following:  

  • That even though you do not dispute the amount owed and the entire amount owed can be collected, the act of collecting this entire amount would present an economic hardship to you; OR 
  • Exceptional circumstances exist which reduce your ability to pay the amount you owe. 

How do I get My OIC Approved?  

While there are no guarantees, there are some steps you can take to help increase your chances of your OIC being approved:  

  • Gather as much information as you can about your income, case, assets, investments, credit available, debt, and monthly expenses and income.  
  • Fill out all required forms. 
  • Attach all necessary documentation. 
  • Include all necessary payments, such as the application fee and – if you are proposing a payment plan – your first installment or – if you are offering a lump-sum payment – at least 20 percent of the offer.  
  • Schedule a consultation with Ayar Law as soon as possible. We have been representing clients in cases against the IRS for more than a decade. This is what we do, and we have an extensive understanding of how the IRS works.  

Call Today for a Free Case Review 

If you want more information about how to get an offer in compromise approved, call Ayar Law today to book a private consultation with a tax debt attorney. We can help you increase your chances of getting your OIC approved.