An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax debt for less than what is owed. The IRS has the authority to settle, or compromise, your tax debt by accepting less than full payment for what you owe in taxes, interest and penalties under certain circumstances. An OIC may allow you to settle back taxes at a substantial discount on the basis of doubt as to collect-ability, doubt as to liability, or effective tax administration. In addition, while your offer is under consideration, the IRS is prohibited from instituting any levies of your assets or wages.
Satisfying the many procedure requirements is necessary if an OIC is to be reviewed and considered for approval by the IRS, and is one of the benefits in hiring an experienced tax professional for filing and OIC.