IRS Publishes Warning on Offer in Compromise Mills

 The Internal Revenue Service (IRS) recently issued a warning to taxpayers to watch out for so-called "Offer in Compromise mills," which are companies or promoters that claim to be able to help taxpayers settle their IRS debts through an Offer in Compromise (OIC) but often engage in unethical and illegal practices.

In a news release, the IRS included OIC mills in its annual "Dirty Dozen" list of tax scams, which highlights the most common and dangerous tax-related scams that taxpayers should watch out for. Here's what you need to know about OIC mills and how to protect yourself.

What is an Offer in Compromise?

An Offer in Compromise is a program offered by the IRS that allows taxpayers to settle their tax debts for less than the full amount owed. To qualify for an OIC, the taxpayer must demonstrate that they are unable to pay the full amount of their tax debt, either through a lump sum payment or a payment plan. The IRS will consider the taxpayer's income, expenses, assets, and other factors in determining whether to accept an OIC.

What are Offer in Compromise mills?

Offer in Compromise mills are companies or promoters that claim to be able to help taxpayers settle their IRS debts through an OIC. These companies often use high-pressure sales tactics to convince taxpayers that they need their services to settle their tax debts, and they may make false promises or guarantees about the likelihood of success.

In many cases, OIC mills charge exorbitant fees for their services, even though taxpayers can apply for an OIC directly with the IRS for free. OIC mills may also engage in unethical or illegal practices, such as submitting false or incomplete information to the IRS, or failing to disclose all of the fees and costs associated with their services.

How can taxpayers protect themselves from OIC mills?

If you are struggling to pay your tax debts and are considering an Offer in Compromise, it's important to be cautious and do your research before working with any company or promoter that claims to be able to help you. Here are some tips to protect yourself from OIC mills:

• Beware of high-pressure sales tactics: If a company or promoter is pressuring you to sign up for their services, or making promises or guarantees that seem too good to be true, it's probably a scam.

• Check the company's reputation: Before working with any company or promoter, do some research to see if they have a good reputation. Check for reviews or complaints online, and see if they are accredited by the Better Business Bureau.

• Know your rights: Remember that you can apply for an Offer in Compromise directly with the IRS for free, and that you have the right to negotiate directly with the IRS on your own behalf.

• Don't sign anything without reading it first: If you do decide to work with a company or promoter, make sure you read and understand all of the terms and conditions of their services, including any fees or costs.

In conclusion, while an Offer in Compromise can be a legitimate way to settle your tax debts, it's important to be cautious and do your research before working with any company or promoter that claims to be able to help you. Don't fall victim to the high-pressure sales tactics and false promises of OIC mills.

For a more detailed discussion, check out my series on Offers in Compromise. Please contact Martin Cantu, EA for a free consultation on your particular tax issues.