Dallas tax attorneys

Do you owe more than $50,000 in Back Taxes? Help may only be a phone call away.

IRS Offer in Compromise

In certain circumstances, a taxpayer may be able to negotiate a lower payment with the IRS to settle back taxes. An IRS debt settlement or IRS offer in compromise is an agreement between the taxpayer and the IRS in which the IRS agrees to settle IRS debt for less than the full tax debt owed in exchange for a lump-sum payment.

IRS Tax Settlement through Offers In Compromise

There are many television and radio ads promising to discharge individual’s tax debts for pennies on the dollar through offers in compromise (OIC).

The fact is that OICs can be difficult to negotiate. The IRS has very strict guidelines regarding qualifications for an OIC, and rigid formulas it uses to determine how much money can realistically be collected from a taxpayer.

The IRS examines the taxpayer’s assets, income, liabilities and properties when determining whether to agree to an OIC.

The IRS may accept an OIC based on three grounds.

  • Acceptance is permitted if there is doubt as to liability. This ground is only met when there is a genuine dispute as to the existence or amount of the correct tax debt under the law.
  • Acceptance is permitted if there is doubt that the amount owed is fully collectible. Doubt as to collectability exists in any case where the taxpayer’s assets and income are less than the full amount of the tax liability.
  • Acceptance is permitted based on effective tax administration. An offer may be accepted based on effective tax administration when there is no doubt that the tax is legally owed and that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.

Requirements Of An Offer In Compromise

In addition to making a lump-sum payment, taxpayers are often also required to complete other requirements such as:

  • Timely file tax returns for five years following the date of OIC acceptance
  • Pay tax liabilities on time for five years following the date of OIC acceptance
  • Timely file and pay estimated and employer withholding taxes for the current tax year

Successful Offers Require Personal Attention to Every Detail.

At the Perliski Law Group, we thoroughly evaluate our clients’ financial circumstances to determine whether the IRS will agree to settle IRS debt, the predicted amount of the IRS debt settlement and whether an IRS OIC is the best settlement strategy for each individual client.

We then work closely with clients to gather all of the necessary documentation and develop the strong positions needed to negotiate the best possible IRS debt settlement.


Have a Question?

Perliski Law Group IRS Tax Controversy

The Perliski Law Group understands that dealing with the IRS can be stressful. Our attorneys are all admitted to the U.S. Tax Court and have many years of experience working with IRS collections issues. We have broad shoulders; let us step in and negotiate on your behalf. During your free initial consultation, we will explain the options that may be available to you.

Blog Topics

Helpful Articles

What do I do if I receive a Notice of Deficiency from the IRS?

Question. What do I do if I receive a Notice of Deficiency from the IRS? Answer. You will get this letter if you owe additional tax or other amounts for the tax year(s) listed in the letter. The letter explains how to dispute the adjustments if you do not agree. If...

How do I appeal an IRS Audit?

Question: How do I appeal and IRS Audit? Answer:  First, after you audit, the IRS sends an examination report with proposed adjustments to the taxpayer; these will also include additional penalties and interest. Assuming you don't sign off and return a copy of the...

What is a Small Tax Case?

Question. What is a Small Tax Case? Answer. “Small tax cases” are handled under simpler, less formal procedures than regular cases. However, the Tax Court’s decision in a small tax case cannot be appealed to a Court of Appeals by the IRS or by the taxpayer(s). If you...

What is an In-Business Trust Fund Installment Agreement?

Question: What is an In-Business Trust Fund Installment Agreement? Answer: Small businesses who currently have employees can qualify for an In-Business Trust Fund Express Installment Agreement (IBTF-Express IA). These installment agreements generally do not require a...

What is Innocent Spouse Relief?

Generally, both you and your spouse are responsible, jointly and individually, for paying any tax, interest, or penalties from your joint return. If you believe your current or former spouse should be solely responsible for an erroneous item or an underpayment of tax...

How to Order your own IRS Tax Transcript

There are many reasons why you should keep a copy of your federal tax return. For example, you may need it to answer an IRS inquiry. You may also need it to apply for a student loan or a home mortgage. If you can’t find your tax return, the IRS can provide a copy or...

“We highly recommend the Perliski Law Group! They worked diligently with us to create an offer in compromise that was accepted by the SBA and the lender. Fair price and very responsive to all our questions and concerns. We couldn’t have asked for more.”

Jim H.