If you cannot pay your tax debt in full or you dispute what is owed,
you may propose to resolve the matter with an Offer in Compromise.
The purpose of an Offer in Compromise is to settle a taxpayer's liability for
less than the full amount owed. The ultimate goal is a resolution that is in
both the government's and the taxpayer's best interest.
To submit an offer complete
Offer in Compromise. Detailed instructions are provided with the form.
If the basis of your offer is inability to pay, also complete
Collection Information Statement for Individuals and/or
Collection Information Statement for Businesses. We cannot consider
an offer on this basis if you're involved in an open bankruptcy proceeding or
if you have not filed all federal tax returns. In-business taxpayers must
have also timely filed employment tax returns for the two prior quarters
and have timely deposited all employment taxes for the two prior quarters and
the current quarter. The amount of your offer should equal or exceed your
equity in assets, your ability to make installment payments from future income,
amounts we can collect from third parties on your behalf and funds that are
available to you but not subject to the Service's collection actions.
You may choose to pay the offer amount in a lump sum, in monthly payments
over the remainder of the statutory time allowed for collection or a combination
of a lump sum and monthly payments. Generally, it is to your advantage to pay
the amount in the shortest time possible because longer payment terms will require
a larger offer amount.
If the basis of the offer is a dispute as to what is owed, provide a written statement
of supporting evidence. We cannot accept a compromise on this basis if a court has
decided the liability.
Ordinarily, we will withhold collection action while we consider your offer.
The statutory time allowed for collection is suspended during the period your offer
An examiner will evaluate your offer and may request additional documentation from you to
verify financial or other information you provide. If we decide a larger offer amount is
necessary to justify acceptance you will be given an opportunity to amend your offer.
In exceptional circumstances, some taxpayers may qualify for a special type of Offer in Compromise
even though the amount owed is correct and it can be paid in full. To be eligible for a
compromise on this basis you must demonstrate that paying the debt would create an economic hardship
or would be unfair and inequitable.
If the IRS grants you a fresh start by accepting your offer it is expected there will be no
further delinquencies. If you do not abide by all the terms of our agreement, including filing
all future returns and making all payments when required, your offer may be declared in default.
We will reinstate the entire liability including accrued penalty and interest. All payments made
toward the offer will be applied to the original liability.
If we reject your offer you will be notified by mail. In our letter, we will explain the reason
for the rejection and provide detailed instructions on how to appeal our decision.
Additional information about the Offer in Compromise can be found on Form 656, and in
Understanding the Collection Process. Publications and forms may be
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