Tax Representation
Offers in Compromise

Offers in Compromise

Some Truthful History

This is the hottest thing that has come down the road in a long time. When I started at Internal Revenue as a Revenue Officer Trainee in Newark, NJ there was an Offer In Compromise Group. They had approximately 10 Revenue Officers and a Group Manager. On the average, one or two Offers were accepted per year. The governing philosophy was that they would only approve an Offer if the individual was either dead or dying. This program was the object of scorn and ridicule.

In the early 90's, Congress starting criticizing IRS for having such large tax debts owed to the Government. Since IRS was not willing to give any breaks the tax debts owed continued to rise. Finally, someone with insight brought up the Offer In Compromise Program.

Initially, the Offer In Compromise (OIC) program was a joke. OICs were deemed unprocessible if one 'i" was not dotted or one "t" crossed. (This was because IRS did not have enough employees to run this program, a problem that still exists.) In the middle 90's IRS began streamlining the process but there were still administrative problems.

What's New

Finally, with the advent of the new IRS Restructuring and Reform Act of 1998, taxpayers actually have a reasonable chance to remove the burden of taxes that they could not possibly pay over more than one lifetime. Sadly, the program really does not apply to businesses. Generally IRS will only accept an OIC on a business if the business is no longer operating and the amount is set at the Trust Fund as a minimum offer.

How To Do It

The procedures are simple….completion of a Form 433A (and 433B if appropriate) and Form 656. Also, you are required to pay a $150 filing fee. These are submitted to the OIC Group in Holtsville , NY. Evaluation of the documentation is done between the Offer Examiner/Revenue Officer and me and an acceptable Offer In Compromise is struck. You pay the amount Offered and the IRS discharges all liens filed against you within 30 days.

Can It Be Done by Anyone

Of Course. In fact IRS encourages individuals to file their own Offers In Compromise. However, you will never be sure that you struck the best deal. You will never know if you paid too much. You will never know if that smiling Offer Examiner/Revenue Officer was really looking out for your best interests. Only someone who actually was a Revenue Officer and who has lived with the Internal Revenue Manual can be of real help. Furthermore, the Internal Revenue Manual now has more ways for IRS to throw out your Offer. They can deem that the Offer is just a stalling technique, that you took one day too long to submit data or some other inconsequential excuse. Remember, not all IRS employees have high integrity.