The IRS (IR-2004-17 dated on Feb. 3, 2004)issued a consumer alert advising taxpayers to beware of promoters’ claims that tax debts can be settled for “pennies on the dollar” through the Offer in Compromise Program.
Some promoters are inappropriately advising indebted taxpayers to file an Offer in Compromise (OIC) application with the IRS. This bad advice costs taxpayers money and time. An Offer In Compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances, not all circumstances.
The OIC program serves an important purpose for a select group of taxpayers, if you meet the program’s requirements. The IRS is urging taxpayers not to be duped by high-priced promises to eliminate IRS tax liabilities.
The OIC may be considered only after other payment options have been exhausted. If taxpayers are unable to pay their taxes in full, there are other payment options, such as monthly installment agreements, that must be explored before an OIC can be submitted.
Taxpayers should consult with a regulated professional (e.g., CPA, EA, or a Tax attorney) or go to the IRS website for more detail information.
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