IRS Policy Regarding an Offer In Compromise

Section 7122 of the IRS Code states, “We will accept an Offer In Compromise OIC when it is unlikely that we can collect the full amount owed and the amount you offer reasonably reflects the collection potential. Our goal is to collect what we can at the earliest possible time with the least cost to the government.”

Under the law, the Internal Revenue Service has designed the OIC program to get as much money as possible from you in any settlement. Since that is their job, don’t think for a second they will be nice guys and give you the information that will help you settle for the least amount possible. They have a fiduciary responsibility and the legal right to collect as much as they can from you. Therefore they’re not going to disclose the details of how you might settle with them for an amount that favors you.

The key to successful settlements is knowing how the Internal Revenue Service evaluates “Collection Potential”. This takes specific knowledge of the law and the IRS; its policies, procedures, formulas, standards and documentation requirements. As you can see, a taxpayer is well advised to seek professional assistance if they are serious about having their “Offer” accepted.

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