The Offer in Compromise is agreement between a taxpayer and the IRS that settles a taxpayer’s liability for less than what is owed. An Offer in Compromise is accepted when:
- The assessed tax liability is incorrect;
- The IRS does not believe the full amount of tax can be paid within the collection statute of limitations; or
- The taxpayer has a serious economic hardship
This year, the IRS announced that it is expanding a new streamlined Offer in Compromise (OIC). Now taxpayers with annual incomes up to $100,000 are able to participate. In addition, the old tax liability limit of $25,000 or less has been increased to $50,000 or less. This expansion will open the door for more taxpayers to qualify for an Offer in Compromise.
If successful, the OIC can be an excellent way to resolve tax debt, interest, and penalties; however, an Offer in Compromise has a low acceptance rate and is not always the right option. A taxpayer should be aware that submitting an Offer in Compromise can have adverse effects such as extending the statute of limitation on collection or on discharging old tax debt through bankruptcy.
At the Law Offices of Todd S. Unger, Esq., LLC, we are a boutique law firm devoted exclusively to tax resolution. We have the experience necessary to determine if you are a viable candidate for an Offer in Compromise and if it’s the right solution to your particular situation.
We provide a free, no-obligation consultation to taxpayers facing federal tax controversy matters in both New Jersey and New York. To schedule your confidential consultation with a New Jersey tax attorney, call us today at (877) 220-4239, or fill out a contact form and request a consultation.