What is an Offer in Compromise?

An Offer in Compromise is an out of court agreement between the IRS and the taxpayer that resolves the taxpayer’s liability. The Internal Revenue Service has the authority to settle or compromise federal tax liabilities by accepting less than full payment under certain circumstances. These circumstances are: Doubt as to liability – Doubt exists that the assessed tax is correct. Doubt as to collectibility (most common) – Doubt exists that you could ever pay the full amount of tax owed. Effective tax administration – (i.e., economic hardship)

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