Can I really pay less than I owe?

What is an Offer in Compromise?

An offer in compromise (OIC) is a settlement style agreement between the IRS and the taxpayer. While settling for “pennies on the dollar” is the desired result, the truth is very few people qualify and even fewer are successful in properly preparing the complex proposal needed for acceptance, usually because they attempt to handle this on their own.

In most cases, the IRS will not accept an OIC unless the amount offered by the taxpayer is equal to or greater than their expected reasonable collection potential (RCP). The RCP is how the IRS measures the taxpayer’s ability to pay and includes the value that can be realized from the taxpayer’s disposable income and generally their titled or liquid assets.

The IRS uses an Offer Examiner (OE) to investigate all proposals and this OE may push to increase the offer amount or reject, using their own calculations of the taxpayer’s RCP. Every situation is different so its important to understand where the IRS may be flexible regarding claimed expenses or illiquid assets as doing so can mean the difference between a massive savings vs an outright rejection.

If you’re interested in learning more, then let’s schedule time to talk!