| What is a Tax Offer Compromise? This is also known | | | | raised. |
| as the offer in compromise (OIC) and is nothing but an | | | | Doubt as to Liability: Doubts could arise if the tax liability |
| agreement that is reached upon by the IRS and the | | | | that is calculated or assessed is correct. A few |
| taxpayer. This compromise is usually an amount that | | | | reasons for this could be that a) a mistake made by |
| both parties agree on and is lesser than the liabilities | | | | the examiner when interpreting the law b) if the |
| that the taxpayer originally owes. However the | | | | examiner fails to take into consideration the taxpayers |
| compromise amount should adhere to the RCP | | | | evidence c) there is new evidence discovered on the |
| (reasonable collection potential). The IRS measures the | | | | taxpayer. |
| liability of the taxpayer via the RCP and it also includes | | | | Effective Tax Administration: The IRS will be |
| the amount that is realized by the taxpayer's assets | | | | convinced that the tax can be collected and that there |
| like automobiles, real property, other property and bank | | | | is no chance for non payment or no reason for inability |
| accounts. As a tax payer there are three types Tax | | | | of tax payment as well as the tax is right. However |
| offer Compromise or OIC grounds that the IRS will | | | | the IRS can still feel that there could be reasons to |
| readily accept. | | | | consider an OIC. Inorder to be eligible for this |
| Doubt as to Collectibility: They could doubt the | | | | compromise the taxpayer should show that if they |
| taxpayer if they can pay up the entire amount of the | | | | pay the tax then they would face economic hardship |
| tax liability that the tax payer owes. This should be | | | | for the entire term and collection of the tax will be |
| paid off within the stipulated period as stated in the | | | | inequitable and unfair on their part. |
| compromise. | | | | If you are looking at partial payment or a compromise |
| For e.g. If as a tax payer you owe $40,000 as unpaid | | | | option to pay up your tax liability to the IRS then you |
| tax liabilities and if the taxpayer agrees on the amount | | | | might also want to know how it works. Usually with |
| to be paid then the taxpayer should have enough | | | | the help of tax attorneys you will be able to reach a |
| funds to pay off the tax. If the tax payer does not | | | | compromise position especially if you feel that paying |
| earn as much that will suffice for the liability payments | | | | the entire amount would leave you financially unstable. |
| as well as expense then there will definitely be doubts | | | | |