Settle for Pennies on the Dollar?

Understanding the OFFER IN COMPROMISE process.

Do I qualify for ¢  on the $ ?

The Internal Revenue Service has had the ability to compromise liabilities owed to the United States Government for many many years.  This taxpayer benefit has been applied inconsistently to taxpayers around the country (click here to see how inconsistent the IRS is toward Offers).  It has been a process known to only a few and usually benefited only the well-connected and wealthy taxpayers of the country.  For example, even in the nineties, taxpayers in Florida were denied this benefit until knowledgeable taxpayer representatives forced the issue through the use of elected representatives.  Even today, if you live in Arizona, you will be denied a speedy resolution of your Settle IRS.  The managers of the various IRS Districts have been accustomed to setting their own priorities and many of them do not relish cutting deals with taxpayers regardless of the benefit to the Government and the taxpayer.

For many years there were two types of offers:

  • Settle IRS on Basis of Liability

  • Settle IRS on Basis of Collectibilty

In 2000 another category was added:

  • Settle IRS on Basis of Effective Tax Administration

A layman might think "Well, it seems everyone is getting a deal on their taxes.  I think I'll offer, say, twenty cents on the dollar."

Sorry, it just doesn't work that way.  The great majority of taxpayers will have to pay their taxes in full.

Submission, negotiating, and winning acceptance of an Settle IRS is more art than science.  Many variables outside the control of the taxpayer impact the decision.