According to Stand Up to the IRS (Nolo Press; $29.99), the IRS will consider an Offer in Compromise for only three reasons:
This may sound like the deal of the century, but submitting an Offer in Compromise and essentially playing Let's Make a Deal with the IRS is a very formal, intensive, and time-consuming process.
The $150 user fee must be attached to Form 656; if no fee is required, Form 656-A, Income Certification of Offer in Compromise
, must be attached.
On July 25, 2001, the IRS accepted Dutton's offer in compromise
. On August 12, 2002, it notified Dutton he was riot entitled to relief from joint and several liability under sections 6013(c), 6015(b), (c) and (f) for 1986 and 1987.
For taxpayers facing dire financial circumstances who are unable to pay the entire tax bill, the Offer in Compromise
program allows the IRS to negotiate a settlement.
Look for the online offer in compromise
program at http://www.irs.gov.
For these offers, taxpayers must complete Forms 656, Offer in Compromise
; 433-A, Financial Information for Individuals; 433-B, Financial Information for Businesses; and supplemental information.
Form 656-A specifies that, before an offer in compromise
will be considered, the Service must first determine that the taxpayer owes tax and that the taxpayer has sufficient assets or income (or both) to pay it.
A recent change to the OIC form (Form 656, Offer in Compromise
) should make it easier for taxpayers to submit offers.
However, these procedures provide that if an offer in compromise
is rejected or withdrawn due to the inadequacy of the offer, the Service will, consistent with the reasons for refection, commence collection proceedings.
To have an offer in compromise
considered by the IRS, a taxpayer must establish, to the Service's satisfaction, --the inability to pay; or --doubt as to the actual underlying liability.
These concerns and others (such as delays in the decision process) triggered the revisions to the offer in compromise
program and the revised policy statement regarding offers.