Tax Litigation Law Office of Scott Kauffman
(949) 474-1820

Hackney Literary Award
Mighty River Short Story Contest Winner

Considering an OIC for tax debt? Tool helps assess eligibility

It's been a few months since we last discussed the offer in compromise (OIC). As we explained in our April 2 post, the OIC is a procedure for resolving tax debt with the IRS for less than the taxpayer owes.

Of course, there are many specific factors involved in the determination of whether a specific taxpayer is eligible for an OIC. Tax attorneys guide their clients through this process, seeking to settle tax debts on terms that make sense for taxpayers who are unable to pay the entire amount due.

The IRS is aware that taxpayers have many questions about qualifying for an offer in compromise. That is why the agency's Web site now offers an online tool to be used in the preliminary assessment of OIC eligibility. The tool is called the OIC Pre-Qualifier.

Quite rightly, the IRS offers this tool with the disclaimer that it is intended only as a guide. It is not meant for definitive answers. And it hardly takes the place of advice from a tax attorney.

That said, however, the IRS's tool can show a taxpayer the types of questions that will come into play when considering an OIC.

For example, the first question is whether the taxpayer has already filed for bankruptcy. There are also preliminary questions about whether federal taxes have been filed and about estimated tax payments. Many taxpayers are required to submit such payments quarterly, often because they are classified as self-employed under the tax code.

The IRS can be very aggressive in the collection actions it takes against taxpayers. And so taxpayers who may be considering an OIC to resolve that debt may benefit from knowing about this new pre-qualifying tool.

Source: IRS.gov, "Offer In Compromise Pre-Qualifier"