Austin Tax Blog


Offer in Compromise can be simply put as the negotiation between the taxpayer and Internal Revenue Service to figure out a clearance solution which does not weigh heavy on the taxpayer. In this, the payable amount is lesser than the actual tax debt and is considered only when the taxpayer proves his/her inability to pay the actual amount of state or federal tax debt. Offer in Compromise was initiated by the IRS to ease out the load on taxpayers who are genuinely unable to clear their tax debts.

Whenever you apply for an OIC, you should be able to convince the IRS about your offer in compromise qualifications. They should get an obvious idea that you as a taxpayer cannot clear your tax liability by paying the full amount. Then only they will consider your application and figure out methods to help you make partial payments that are possible from your end. To get an offer in compromise approved, check some expert tips to avoid any hassles.

Find Here, Some Of The IRS Offer In Compromise Tips:

When you want to get the benefit of IRS Offer in Compromise then the following tips would help you apply in a manner that you have more chances of getting your application accepted. Anyways, the IRS has become liberal now and is accepting a high ratio of applications that is nearly 40% of the applications are accepted when compared to 25%-30% in the previous decade.

Prove financial incompetence: Firstly, you need to submit an application that showcases all the facts suggesting that you are facing absolute financial hardship. The IRS will review your income and offer you the OIC status only if they feel that you are actually unable to make the payment. So, hire tax experts that create a foolproof application that is undeniable by the IRS.

Fill up relevant forms: Your tax professional needs to fill the following forms depending on your financial condition:

  • Form 656 – Offer in Compromise – The main form of application
  • Form 656 – A – For waiving off the OIC processing fee
  • Form 433 – A (OIC) – To check the financial incompetence based on your income, liabilities, assets and routine expenses. This is for individuals that are either wage earners or self-employed.
  • Form 433 – B (OIC) – This is similar form but for the business sector.

You must hire a qualified tax professional who has the experience of dealing with OIC applications. If not then you may lose out on the chance to convince the IRS about your inability to pay the taxes.

Be prepared for the IRS OIC investigation: The IRS will keep a periodic check on everything from your income proofs to your tax return statements. OIC applications would be returned without any further processing if the taxpayer has not filed returns as of March 2017.

Check the Collection Financial Standards: Your tax professional need to calculate your allowable living expenses through the Collection Financial Standards. The tax expert should compare them with your income and expenses to ensure that your IRS Offer in Compromise qualifications is met. This is an important step as it allows you to lead a comfortable life while still paying the delinquent taxes.

Finally, apply: Once everything is in place for your application, you need to contact an IRS agent to review your application. The application can be emailed and queries can be sorted out on the phone. Make sure that you mention specific points to prove your inability to pay the state or federal taxes.

Appeal on rejection: If by any means, you face the rejection for your OIC application then try the option of submitting an appeal within 30 days of the actual date of rejection. You may need to submit additional documents required to renegotiate the IRS OIC application.

IRS Compromise and Settlement

The best way to get your OIC Application approved is to hire the best tax professionals in Austin. As they are experts in their field, the chance of rejection becomes null. Although you have to pay for their fees, you will benefit from getting an approval from IRS. If you want then Escobar & Associates can help you deal with the OIC negotiations. We have successfully done it for many clients and you could be the next to leverage our services.

For more details, feel free to CONTACT US or Call us on 512-442-3055, Mon – Fri 10:00 am to 4:00 pm.