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Offer in Compromise

This is the Holy Grail of payment solutions. The Offer in Compromise. The “OIC”. You make the IRS an offer, based upon your financial condition, to pay “pennies on the dollar”. The IRS may not accept your offer. Or they may ask you to raise the amount. Or they may reject your offer.

What are the odds, given that this is expensive [$5,000 seems to be the going rate]?

According to the November 2015 report of the Treasury Inspector General for Tax Administration, TIGTA [the IRS watchdog], both the number of offers submitted has decreased over the past fiscal year, but more importantly, the number of OIC’s accepted decreased for the first time in the past five years.

The number of new offers in compromise receipts submitted by taxpayers decreased 6,282 from 74,217 in FY 2013 to 67,935 in FY 2014

Accepted offers decreased 13 percent, from 31,000 in FY 2013 to 27,000 in FY 2014. However, when compared with conditions in FY 2010, five years ago, the accepted offers in FY 2014 were still up more than 90 percent.

Likely, the recent decrease in offers and acceptance reflect diminished manpower by an IRS which is straining to do everytning Congress asks it to do.

So, what are the odds? Divide accepted offers of 27,000 by submissions of 67,935 = 39%. Thirty-nine percent acceptance rate for FY 2014. We think those are good odds. At Kowal Tax Clinic, we have a better rate, as we dissuade those with no case. We don’t want to waste your money.

The following chart gives a picture of all this.

OIC is a very intensive process requiring a lot of records, as well as strategy. When done correctly, it truly does give the taxpayer a fresh start.

The thing to keep in mind is that OIC is NOT a right. It is a privilege granted by IRS to the Taxpayer. There is no right to an OIC. We must tread very carefully throughout the process, keeping in mind that there are no face-to-face discussions. The entire affair is done over the telephone and by mail or fax. We are in the position of beggars, we are crawling on our bellies asking IRS to play nice. At Kowal Tax Clinic, we have no shame. We wil beg on your behalf. Call us.