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Over 30 Years of Experience handling tax controversies & tax disputes

Half a loaf may be better for both: the IRS and OIC acceptance

"Half a loaf is better than none," or at least so the old saying goes. And indeed, compromise is often better than protracted conflict.

To a somewhat surprising degree, this is true for the IRS as well. In recent years, the agency has shown itself increasingly willing to negotiate with taxpayers who seek to settle their tax debt for less than the full amount.

In this post, we will discuss the program that allows for this. It is called an offer in compromise (OIC).

To be sure, there is no guarantee that the IRS will accept a taxpayer's offer. There is a formal procedure required for application and the IRS will surely scrutinize your ability to pay carefully.

But the IRS has become more willing than in the past to accept a taxpayer's offer to resolve tax debt though an OIC. This willingness was well reported in the tax community this week in the run-up to the April 15 filing deadline.

The mainstream press also picked up on the story. For the account from the Boston Globe, click here.

In the most recent fiscal year, the IRS accepted about 31,000 OICs. The acceptance rate was 42 percent, up from 38 percent the year before.

According to the respected TaxProfBlog, this was as high as the acceptance rate has ever been since the IRS began releasing data on it in 1999.

In short, there is an encouraging trend toward the approval of OICs. In addition, a tax law firm can help you put your best foot forward in your OIC application.

Putting your best foot forward starts with gathering all of the relevant financial information and completing all of the required IRS forms. But it also involves advocacy on your behalf, seeking to show the IRS why it makes sense to accept half a loaf: the certainty of payment of part of your tax debt, rather than the uncertain prospect of collecting it all.

For more information about our practice, please visit our page on offers in compromise.

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