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Unlocking the Secrets of an Offer in Compromise: A Comprehensive Guide Chapter 3 - How Much Do I Offer?

  Calculating the Amount of your Offer in Compromise – What is Your Reasonable Collection Potential (RCP)? Drum roll please! This is what you’ve been searching for – how much do I offer? How little can I get away with? Why not low ball them?   Here are the two most important concepts to understand before you start your OIC.   Key Point 1 - You’re not buying a car or a house. The Settlement Agent does not work on commission. They don’t have to settle and the decision to settle rests entirely with the Settlement Officer. Any offer or counter-offer you make has to be backed up by the numbers.   Key Point 2 – Determine your Reasonable Collection Potential before making an offer. Reasonable Collection Potential (RCP) is a key factor considered by the IRS when evaluating an Offer in Compromise (OIC). RCP refers to the amount of money the IRS believes it can collect from a taxpayer based on their assets, income, and future earning potential.   The IRS...
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Unlocking the Secrets of an Offer in Compromise: A Comprehensive Guide - Chapter 1

  This is the first in a series of posts I’ll have on an IRS Offer in Compromise. Through this series I expect answer all of your basic questions, and a few out of the box specific question. If you have a specific question, you would like addressed, please drop me a line or post a comment.   With that introduction lets get started learning about Offers in Compromise and increasing your chance of qualifying for an OIC.   An Offer in Compromise (OIC) is a tax resolution option offered by the IRS that allows taxpayers to settle their tax debt for less than the full amount owed. The purpose of an OIC is to provide a way for taxpayers who are struggling financially to resolve their tax debt in a manner that is fair to both the taxpayer and the government. The IRS will consider an OIC when it is unlikely that the tax debt can be paid in full and the taxpayer's assets and income are not sufficient to fully pay the debt. An OIC can also be considered when the taxpayer has a ...
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Unlocking the Secrets of an Offer in Compromise: A Comprehensive Guide Chapter 2

  OFFER IN COMPROMISE: THE PROCESS FOR MAKING AN OFFER   “… (the IRS) OIC program that is itself full of compromises, as the needs of the tax system as a whole are balanced against the needs of the individual taxpayers.” Professor Bryan Camp, Lessons From the Tax Court: The Concept of Reasonable Collection Potential, August 16, 2021.       General Overview Prior to getting too far into the weeds here, you as the taxpayer should keep in mind that an Offer in Compromise is not the only way to resolve your tax debt. An Enrolled Agent, taking all the factors into account, can assist you with alternatives. Going through the OIC, even if the offer is not accepted, can identify other potential avenues for resolution. An Enrolled Agent specializes in this role. The process of submitting an Offer in Compromise (OIC) to the IRS can be complex and time-consuming. Here is a general overview of the process: ·          ...
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