[{"@context":"https:\/\/schema.org\/","@type":"Article","@id":"https:\/\/moneydoneright.com\/taxes\/tax-relief\/what-is-an-offer-in-compromise\/#Article","mainEntityOfPage":"https:\/\/moneydoneright.com\/taxes\/tax-relief\/what-is-an-offer-in-compromise\/","headline":"What Is an Offer in Compromise?  A CPA Explains","name":"What Is an Offer in Compromise?  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OIC IRS Review Timeline!","description":"\u27a1\ufe0f Request your FREE tax relief consultation at https:\/\/choicetaxrelief.com\/free-tax-relief-consultation\/\n\nIn this video I'm giving you the offer in compromise timeline and answering questions like, \"How long does an offer in compromise take?\" and, \"What is the OIC IRS review timeline?\"  Although I can't tell you to the day how long your offer in compromise will take, I give you some general guidelines on what to expect.  Then, at the end of the video, I give you some tips on how to get your offer in compromise processed as quickly as possible!\n\n\u2b07\ufe0f Free E-Book:\n- 7 Secrets About Your Tax Debt the IRS Doesn't Want You to Know: https:\/\/choicetaxrelief.ac-page.com\/secrets-about-your-tax-debt-the-irs-doesnt-want-you-to-know\/\n\n\u2b07\ufe0f Other Videos Mentioned:\n- Offer in Compromise Explained: https:\/\/youtu.be\/tR3uaqJE86o\n- How to File Back Taxes: https:\/\/youtu.be\/l4nj4ceBz_o\n- All My Tax Relief Videos: https:\/\/youtube.com\/playlist?list=PLHmwDU0qD1fj_JQAqO7aczwsrtLfWOSfQ\n\n\u2b07\ufe0f Table of Contents:\n0:00 How Long Does an Offer in Compromise Take?\n2:12 Can It Really Take Over 5 Years?\n3:06 Typical Offer in Compromise Situation (7-12 Months)\n4:18 Complex Offer in Compromise Situation (12-18 Months)\n5:11 Variable Offer in Compromise Situation (12-18 Months)\n6:42 The Two-Year Rule\n7:18 Tips to Get Your Offer in Compromise Processed As Quickly As Possible","thumbnailUrl":["https:\/\/i.ytimg.com\/vi\/wPwR8r9MazI\/default.jpg","https:\/\/i.ytimg.com\/vi\/wPwR8r9MazI\/mqdefault.jpg","https:\/\/i.ytimg.com\/vi\/wPwR8r9MazI\/hqdefault.jpg","https:\/\/i.ytimg.com\/vi\/wPwR8r9MazI\/sddefault.jpg","https:\/\/i.ytimg.com\/vi\/wPwR8r9MazI\/maxresdefault.jpg"],"uploadDate":"2022-10-26T16:48:18+00:00","duration":"PT10M36S","embedUrl":"https:\/\/www.youtube.com\/embed\/wPwR8r9MazI","publisher":{"@type":"Organization","@id":"https:\/\/www.youtube.com\/channel\/UCQ9WUXlSuLlbi5BLkgtEUEA#Organization","url":"https:\/\/www.youtube.com\/channel\/UCQ9WUXlSuLlbi5BLkgtEUEA","name":"Logan Allec","description":"Logan Allec is a CPA and the founder of Choice Tax Relief, which specializes in helping people with their IRS and state tax debt.","logo":{"url":"https:\/\/yt3.ggpht.com\/43_VKqrbO06RGMcxfdQbDXosrkVRq1yf5QgSQEiR4ILUGWV9fJtTh0o2ftYMYqVo6PwnEOPRdg=s800-c-k-c0x00ffffff-no-rj","width":800,"height":800,"@type":"ImageObject","@id":"https:\/\/www.youtube.com\/watch?v=wPwR8r9MazI#VideoObject_publisher_logo_ImageObject"}},"potentialAction":{"@type":"SeekToAction","@id":"https:\/\/www.youtube.com\/watch?v=wPwR8r9MazI#VideoObject_potentialAction","target":"https:\/\/www.youtube.com\/watch?v=wPwR8r9MazI&t={seek_to_second_number}","startOffset-input":"required name=seek_to_second_number"},"interactionStatistic":[[{"@type":"InteractionCounter","@id":"https:\/\/www.youtube.com\/watch?v=wPwR8r9MazI#VideoObject_interactionStatistic_WatchAction","interactionType":{"@type":"WatchAction"},"userInteractionCount":2110}],{"@type":"InteractionCounter","@id":"https:\/\/www.youtube.com\/watch?v=wPwR8r9MazI#VideoObject_interactionStatistic_LikeAction","interactionType":{"@type":"LikeAction"},"userInteractionCount":65}]},{"@context":"http:\/\/schema.org\/","@type":"VideoObject","@id":"https:\/\/www.youtube.com\/watch?v=tR3uaqJE86o#VideoObject","contentUrl":"https:\/\/www.youtube.com\/watch?v=tR3uaqJE86o","name":"Offer in Compromise 2026: How to Qualify and Submit Your Offer to the IRS","description":"If you owe over $10,000 in back taxes, give us a call at 866-8000-TAX or book a FREE tax relief consultation at https:\/\/choicetaxrelief.com\/free-tax-consultation\/\n\nToday I am talking about the offer in compromise to the IRS.  One of the most popular questions I get from people who owe back taxes to the IRS is, \u201cLogan, what is an offer in compromise?  Do I qualify for an offer in compromise?  How do I do an offer in compromise?\u201d Those questions and more will be addressed in this video!\n\n\u27a1\ufe0f IRS Tax Relief: Do you owe the IRS more than $10,000 in back taxes?  Request your FREE tax relief consultation at https:\/\/choicetaxrelief.com\/free-tax-relief-consultation\/\n\n\u2b07\ufe0f More Tax Relief Videos:\nIRS Offer in Compromise Formula: https:\/\/youtu.be\/1jDj6yHnjMI\nHow to File Back Taxes and Avoid Penalties: https:\/\/youtu.be\/l4nj4ceBz_o\n\nTable of Contents:\n0:00 Offer In Compromise\n3:30 What Is An Offer In Compromise?\n4:50 \"Baseline\" Requirements To Qualify\n11:45 3 Kinds of Offers in Compromise\n12:20 Doubt As To Collectibility\n14:25 Doubt As To Liability\n15:45 Effective Tax Administration\n17:25 Submitting Your Offer In Compromise\n19:30 Offer in Compromise Down Payment\n20:01 Offer in Compromise Application Fee\n20:07 Low-Income Certification\n21:40 What to Send to the IRS in Your Offer Package\n22:06 Where To Send Your Offer In Compromise\n22:38 After You Submit Your Offer In Compromise\n22:57 What To Do If Your Offer in Compromise Is Accepted\n24:23 What To Do If Your Offer in Compromise Is Rejected\n25:20 Deemed Acceptance Rule\n26:00 Offer in Compromise and Tax Liens\n27:07 Stopping Payments on Installment Agreements\n27:43 Submitting a Second Offer in Compromise\n27:59 Interest Accrual\n28:12 Application of Payments\n28:44 Other Offer in Compromise Eligibility Factors\n29:18 Stay Tuned for More Offer in Compromise Videos!\n\n#offerincompromise #taxrelief #taxhelp","thumbnailUrl":["https:\/\/i.ytimg.com\/vi\/tR3uaqJE86o\/default.jpg","https:\/\/i.ytimg.com\/vi\/tR3uaqJE86o\/mqdefault.jpg","https:\/\/i.ytimg.com\/vi\/tR3uaqJE86o\/hqdefault.jpg","https:\/\/i.ytimg.com\/vi\/tR3uaqJE86o\/sddefault.jpg","https:\/\/i.ytimg.com\/vi\/tR3uaqJE86o\/maxresdefault.jpg"],"uploadDate":"2021-05-06T17:21:32+00:00","duration":"PT30M9S","embedUrl":"https:\/\/www.youtube.com\/embed\/tR3uaqJE86o","publisher":{"@type":"Organization","@id":"https:\/\/www.youtube.com\/channel\/UCQ9WUXlSuLlbi5BLkgtEUEA#Organization","url":"https:\/\/www.youtube.com\/channel\/UCQ9WUXlSuLlbi5BLkgtEUEA","name":"Logan Allec","description":"Logan Allec is a CPA and the founder of Choice Tax Relief, which specializes in helping people with their IRS and state tax debt.","logo":{"url":"https:\/\/yt3.ggpht.com\/43_VKqrbO06RGMcxfdQbDXosrkVRq1yf5QgSQEiR4ILUGWV9fJtTh0o2ftYMYqVo6PwnEOPRdg=s800-c-k-c0x00ffffff-no-rj","width":800,"height":800,"@type":"ImageObject","@id":"https:\/\/www.youtube.com\/watch?v=tR3uaqJE86o#VideoObject_publisher_logo_ImageObject"}},"potentialAction":{"@type":"SeekToAction","@id":"https:\/\/www.youtube.com\/watch?v=tR3uaqJE86o#VideoObject_potentialAction","target":"https:\/\/www.youtube.com\/watch?v=tR3uaqJE86o&t={seek_to_second_number}","startOffset-input":"required name=seek_to_second_number"},"interactionStatistic":[[{"@type":"InteractionCounter","@id":"https:\/\/www.youtube.com\/watch?v=tR3uaqJE86o#VideoObject_interactionStatistic_WatchAction","interactionType":{"@type":"WatchAction"},"userInteractionCount":25186}],{"@type":"InteractionCounter","@id":"https:\/\/www.youtube.com\/watch?v=tR3uaqJE86o#VideoObject_interactionStatistic_LikeAction","interactionType":{"@type":"LikeAction"},"userInteractionCount":890}]},{"@context":"http:\/\/schema.org\/","@type":"VideoObject","@id":"https:\/\/www.youtube.com\/watch?v=l4nj4ceBz_o#VideoObject","contentUrl":"https:\/\/www.youtube.com\/watch?v=l4nj4ceBz_o","name":"How to File BACK TAXES, Avoid PENALTIES, and Get Your Life Back!","description":"\u27a1\ufe0f Request your FREE unfiled tax returns consultation at https:\/\/choicetaxrelief.com\/free-tax-consultation\/\n\nToday I am talking about filing previous years' taxes, also known as back taxes.  I tell you how to file your back taxes step-by-step, how many years back you can (and possibly should) file your back taxes, and more!\n\nThere are many consequences to not filing your tax return, and it's generally in your best interest to file your back taxes as soon as possible.  You should also be aware of the interest and penalties that accrue on back taxes because they can be significant, especially the penalties.  Thankfully, in this video, I cover how the penalties are calculated and how you can possibly get rid of them.  And even if you don't owe taxes, you still want to file to secure your previous year's tax refund.  If you're wondering how many years back you can get a tax refund, I cover that too.\n\n\u27a1\ufe0f Email backtaxes@loganallec.com to get help with filing your back tax returns!\n\n\u2b07\ufe0f More Tax Relief Videos:\n- My Offer in Compromise Basics Video: https:\/\/youtu.be\/tR3uaqJE86o\n- My Offer in Compromise Formula Video: https:\/\/youtu.be\/1jDj6yHnjMI\n\n\u2b07\ufe0f Other Resources:\n- IRS Audit Technique Guides: https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/audit-techniques-guides-atgs\n- IRS Failure-to-File Penalty: https:\/\/www.irs.gov\/payments\/failure-to-file-penalty\n- IRS Policy Statement 5-133: https:\/\/www.irs.gov\/irm\/part1\/irm_01-002-001#idm139624982687680\n- IRS Transcripts: https:\/\/www.irs.gov\/individuals\/get-transcript\n- Bauer v. Commissioner: https:\/\/www.leagle.com\/decision\/intco20120604b95\n- Bizminer: https:\/\/www.bizminer.com\/\n- Bizstats: http:\/\/bizstats.com\/\n\nTable of Contents:\n0:00 How to File Your Back Taxes\n0:56 Why People Get Behind on Their Taxes\n2:08 The Snowball Effect on Back Taxes\n2:28 IRS Notices CP59, CP515, CP516, and CP518\n3:08 You Need to Deal With This\n4:10 Consequences of Not Filing Your Tax Returns\n4:29 IRS Failure-to-File Penalty\n5:13 IRS Failure-to-Pay Penalty\n6:10 Interest Accrual on Back Taxes\n6:49 Loss of Refund (How Many Years Back Can I Get a Tax Refund?)\n8:20 Inability to Get a Loan\n8:36 Inability to Get Student Aid\n8:43 Loss or Delay of Stimulus and Other Forms of Government Aid\n8:57 Loss of Immigration Status\n9:10 Loss of Future Social Security Benefits\n9:25 IRS Substitute for Return (BAD NEWS)\n12:04 Reasons Why You Don't Want the IRS to Prepare Your Return For You\n14:07 How Do You Actually File Back Taxes?\n14:29 How Many Years of Back Taxes Do You Have to File?\n15:13 Step 1: Figure Out What Returns You Need to File\n15:26 Step 2: Determine the Order in Which You Should Prepare Your Returns\n17:59 Step 3: Gather Tax Forms and IRS Transcripts\n19:25 Step 4: Reconstruct Your Information\n24:10 Step 5: Prepare and File Your Returns\n26:45 Penalty Abatement\n27:25 First-Time Penalty Relief\n28:02 Penalty Relief for Reasonable Cause\n\n#tax #taxes #backtaxes","thumbnailUrl":["https:\/\/i.ytimg.com\/vi\/l4nj4ceBz_o\/default.jpg","https:\/\/i.ytimg.com\/vi\/l4nj4ceBz_o\/mqdefault.jpg","https:\/\/i.ytimg.com\/vi\/l4nj4ceBz_o\/hqdefault.jpg","https:\/\/i.ytimg.com\/vi\/l4nj4ceBz_o\/sddefault.jpg","https:\/\/i.ytimg.com\/vi\/l4nj4ceBz_o\/maxresdefault.jpg"],"uploadDate":"2021-08-11T20:30:02+00:00","duration":"PT29M49S","embedUrl":"https:\/\/www.youtube.com\/embed\/l4nj4ceBz_o","publisher":{"@type":"Organization","@id":"https:\/\/www.youtube.com\/channel\/UCQ9WUXlSuLlbi5BLkgtEUEA#Organization","url":"https:\/\/www.youtube.com\/channel\/UCQ9WUXlSuLlbi5BLkgtEUEA","name":"Logan Allec","description":"Logan Allec is a CPA and the founder of Choice Tax Relief, which specializes in helping people with their IRS and state tax debt.","logo":{"url":"https:\/\/yt3.ggpht.com\/43_VKqrbO06RGMcxfdQbDXosrkVRq1yf5QgSQEiR4ILUGWV9fJtTh0o2ftYMYqVo6PwnEOPRdg=s800-c-k-c0x00ffffff-no-rj","width":800,"height":800,"@type":"ImageObject","@id":"https:\/\/www.youtube.com\/watch?v=l4nj4ceBz_o#VideoObject_publisher_logo_ImageObject"}},"potentialAction":{"@type":"SeekToAction","@id":"https:\/\/www.youtube.com\/watch?v=l4nj4ceBz_o#VideoObject_potentialAction","target":"https:\/\/www.youtube.com\/watch?v=l4nj4ceBz_o&t={seek_to_second_number}","startOffset-input":"required name=seek_to_second_number"},"interactionStatistic":[[{"@type":"InteractionCounter","@id":"https:\/\/www.youtube.com\/watch?v=l4nj4ceBz_o#VideoObject_interactionStatistic_WatchAction","interactionType":{"@type":"WatchAction"},"userInteractionCount":90923}],{"@type":"InteractionCounter","@id":"https:\/\/www.youtube.com\/watch?v=l4nj4ceBz_o#VideoObject_interactionStatistic_LikeAction","interactionType":{"@type":"LikeAction"},"userInteractionCount":2551}]},{"@context":"http:\/\/schema.org\/","@type":"VideoObject","@id":"https:\/\/www.youtube.com\/watch?v=1jDj6yHnjMI#VideoObject","contentUrl":"https:\/\/www.youtube.com\/watch?v=1jDj6yHnjMI","name":"Offer in Compromise Guidelines + Formula: EXACTLY How Much to Offer to the IRS!","description":"\u27a1\ufe0f Request your FREE tax relief consultation at https:\/\/choicetaxrelief.com\/free-tax-relief-consultation\/\n\nIn this video I'm giving you the exact offer in compromise formula you need to submit your doubt as to collectibility offer in compromise to the IRS.  I start with explaining what the IRS is looking for (i.e. your reasonable collection potential), then discuss how to value your assets for offer in compromise purposes, then discuss how to determine your monthly income and expenses for offer in compromise purposes per the IRS Collection Financial Standards, and finally put it all together to help you determine your offer in compromise amount.  This offer in compromise training is over an hour long, so be sure to take notes!\n\n\u2b07\ufe0f More Tax Relief Videos:\nMy Previous Offer in Compromise Video: https:\/\/youtu.be\/tR3uaqJE86o\nHow to File Back Taxes and Avoid Penalties: https:\/\/youtu.be\/l4nj4ceBz_o\n\n\u2b07\ufe0f IRS Resources:\n- IRS Form 656: https:\/\/www.irs.gov\/pub\/irs-pdf\/f656.pdf\n- IRS Form 433-A (OIC): https:\/\/www.irs.gov\/pub\/irs-pdf\/f433aoi.pdf\n- Internal Revenue Manual 5.8.5 Financial Analysis: https:\/\/www.irs.gov\/irm\/part5\/irm_05-008-005r\n- Collection Financial Standards: https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/collection-financial-standards\n- National Standards for Food, Clothing, and Other Items: https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/national-standards-food-clothing-and-other-items\n- Local Standards for Housing and Utilities: https:\/\/www.irs.gov\/pub\/irs-utl\/all_states_housing_standards.pdf\n- Local Standards for Transportation: https:\/\/www.irs.gov\/pub\/irs-utl\/all_states_housing_standards.pdf\n\n\u27a1\ufe0f My M1 Finance Review: https:\/\/youtu.be\/XNMhp9xeNq8\n\nTable of Contents:\n0:00 How Much to Offer in Compromise to the IRS\n1:26 Reasonable Collection Potential\n4:08 Equity Component and Income Component\n6:05 Calculating Cash Value\n7:30 Calculating Investments at 80% Quick-Sale Value\n8:40 IRA Example (After Taxes and Penalties)\n12:45 A Note About Quick-Sale Value\n13:58 Valuing Life Insurance Policies\n15:22 Valuing Real Estate\n20:05 Doubt As to Liability With Special Circumstances\n21:26 Effective Tax Administration\n22:15 Calculating Vehicle Value\n23:40 Calculating Miscellaneous Valuable Items Value\n24:33 Calculating Furniture and Other Personal Items Value\n25:43 Adding Your Assets Up\n25:58 Hiding Assets From the IRS (Don't Do It)\n28:34 Self-Employed and Business Information\n29:28 Calculating the Income Component\n31:35 Calculating Gross Monthly Income\n33:05 Calculating Monthly Household Expenses\n33:14 National Standard Expenses\n35:11 National Out-of-Pocket Health Care Expenses\n37:05 Local Expenses\n37:43 Local Standard Expenses for Housing and Utilities\n40:08 Local Standard Expenses for Transportation\n48:03 Health Insurance Premiums\n48:21 Putting Zero vs. Leaving Blank\n48:48 Court-Ordered Payments (Alimony, Child Support, etc.)\n49:52 Term Life Insurance Premiums\n50:10 Current Monthly Taxes\n50:44 Secured Debts\n53:07 401(k) Loans\n53:39 Other Expenses (Student Loans, Mandatory Retirement, Tuition, etc.)\n56:24 Delinquent State and\/or Local Tax Payments\n57:50 Final Reasonable Excess Monthly Income Calculation\n58:18 Determining Your Future Income Multiplier (12 or 24)\n1:00:01 Calculating Your Final Offer in Compromise Amount\n\n#offerincompromise #taxrelief #taxhelp","thumbnailUrl":["https:\/\/i.ytimg.com\/vi\/1jDj6yHnjMI\/default.jpg","https:\/\/i.ytimg.com\/vi\/1jDj6yHnjMI\/mqdefault.jpg","https:\/\/i.ytimg.com\/vi\/1jDj6yHnjMI\/hqdefault.jpg","https:\/\/i.ytimg.com\/vi\/1jDj6yHnjMI\/sddefault.jpg","https:\/\/i.ytimg.com\/vi\/1jDj6yHnjMI\/maxresdefault.jpg"],"uploadDate":"2021-06-24T18:23:11+00:00","duration":"PT1H2M35S","embedUrl":"https:\/\/www.youtube.com\/embed\/1jDj6yHnjMI","publisher":{"@type":"Organization","@id":"https:\/\/www.youtube.com\/channel\/UCQ9WUXlSuLlbi5BLkgtEUEA#Organization","url":"https:\/\/www.youtube.com\/channel\/UCQ9WUXlSuLlbi5BLkgtEUEA","name":"Logan Allec","description":"Logan Allec is a CPA and the founder of Choice Tax Relief, which specializes in helping people with their IRS and state tax 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If a client doesn't qualify for an offer in compromise \u2014 perhaps due to having too much equity in their home \u2014 a viable alternative may be placing them in currently not collectible status.  And in some cases, placing a client in CNC status may actually yield a *better* result than securing an offer in compromise for them.  It all really depends on the client's situation and how much they owe!\n\n\u27a1\ufe0f My Tax Relief Video Playlist: https:\/\/youtube.com\/playlist?list=PLHmwDU0qD1fj_JQAqO7aczwsrtLfWOSfQ\n\nTable of Contents:\n0:00 The Power of the IRS to Collect Taxes\n3:38 IRS Notice CP14\n4:04 IRS Notice CP501\n4:38 IRS Notice CP503\n4:50 IRS Notice CP504\n5:35 IRS Notice LT11\n6:08 Notice of Federal Tax Lien (NFTL)\n8:00 The IRS Wants What\u2019s Theirs\n8:36 What Is IRS Currently Not Collectible (CNC) Status?\n10:44 Effect of CNC Status on Wage Garnishments\n11:18 What Does the IRS Get Out of CNC Status?\n12:04 Currently Not Collectible vs. Offer in Compromise\n14:22 Running Out the IRS\u2019s 10-Year Collection Statute With CNC Status\n16:58 Don\u2019t Be Afraid to Talk to the Manager!\n17:50 Consider All Your Tax Relief Options\n19:59 Passport Revocation and CNC Status\n21:57 How to Get Into CNC Status\n24:04 How to Show Hardship to the IRS to Qualify for CNC Status\n26:50 Can You Still Qualify for CNC Status if You Have Home Equity?\n27:56 Limited Exceptions When Form 433-A or Form 433-F Is Not Required\n28:23 Why You Might Get Kicked Out of Currently Not Collectible Status\n31:22 CNC Status In Summary\n\n#taxrelief #taxhelp #irs","thumbnailUrl":["https:\/\/i.ytimg.com\/vi\/yHpCiTLrlCs\/default.jpg","https:\/\/i.ytimg.com\/vi\/yHpCiTLrlCs\/mqdefault.jpg","https:\/\/i.ytimg.com\/vi\/yHpCiTLrlCs\/hqdefault.jpg","https:\/\/i.ytimg.com\/vi\/yHpCiTLrlCs\/sddefault.jpg","https:\/\/i.ytimg.com\/vi\/yHpCiTLrlCs\/maxresdefault.jpg"],"uploadDate":"2022-05-19T19:09:39+00:00","duration":"PT33M24S","embedUrl":"https:\/\/www.youtube.com\/embed\/yHpCiTLrlCs","publisher":{"@type":"Organization","@id":"https:\/\/www.youtube.com\/channel\/UCQ9WUXlSuLlbi5BLkgtEUEA#Organization","url":"https:\/\/www.youtube.com\/channel\/UCQ9WUXlSuLlbi5BLkgtEUEA","name":"Logan Allec","description":"Logan Allec is a CPA and the founder of Choice Tax Relief, which specializes in helping people with their IRS and state tax debt.","logo":{"url":"https:\/\/yt3.ggpht.com\/43_VKqrbO06RGMcxfdQbDXosrkVRq1yf5QgSQEiR4ILUGWV9fJtTh0o2ftYMYqVo6PwnEOPRdg=s800-c-k-c0x00ffffff-no-rj","width":800,"height":800,"@type":"ImageObject","@id":"https:\/\/www.youtube.com\/watch?v=yHpCiTLrlCs#VideoObject_publisher_logo_ImageObject"}},"potentialAction":{"@type":"SeekToAction","@id":"https:\/\/www.youtube.com\/watch?v=yHpCiTLrlCs#VideoObject_potentialAction","target":"https:\/\/www.youtube.com\/watch?v=yHpCiTLrlCs&t={seek_to_second_number}","startOffset-input":"required name=seek_to_second_number"},"interactionStatistic":[[{"@type":"InteractionCounter","@id":"https:\/\/www.youtube.com\/watch?v=yHpCiTLrlCs#VideoObject_interactionStatistic_WatchAction","interactionType":{"@type":"WatchAction"},"userInteractionCount":10509}],{"@type":"InteractionCounter","@id":"https:\/\/www.youtube.com\/watch?v=yHpCiTLrlCs#VideoObject_interactionStatistic_LikeAction","interactionType":{"@type":"LikeAction"},"userInteractionCount":389}]}],"about":["Tax Relief"],"wordCount":1691,"articleBody":"An offer in compromise is an agreement between a taxpayer and a taxing authority \u2014 such as the IRS \u2014 to settle the taxpayer’s tax debt for less than they owe.Learn what an offer in compromise is and how it works.Our Pick For Best Tax Relief Company\t\t\t\t\t\t\t\t\t\t\t\t\t\t.st5-50967.btn.btn-default:hover{border-color: #4db848;color: #4db848;background: #fff !important;}\t\t\t\t\t\tLearn More\t\t\t\t\t\t\tBBB Accredited: A+ Rating With 5\/5 RatingGuarantee: 30-Day Moneyback GuaranteeReasonable Fees: Lower than Industry AveragesTax Attorneys and CPAs: Decades of Combined Experience\tOffer in Compromise Definition and ExampleAn offer in compromise is a settlement that a taxpayer makes with the government to pay a certain amount of money to the government to cover their back taxes.Acronym: OICFor example, if someone owes $50,000 to the IRS, and they qualify for an offer in compromise, they could settle their tax debt for some lower amount (such as $10,000) through an offer in compromise.Related: 6 Best Tax Relief CompaniesHow Does an Offer in Compromise Work?Individuals and businesses in the United States are subject to income taxes at the federal level and potentially at the state and local levels as well.While most of these individuals and businesses pay their taxes in full, a large minority do not \u2014 often for years.And not only can these taxpayers owe significant back taxes over several years, but they also face the accrual of substantial penalties and interest over the years.In an effort to get these taxpayers back into the tax system, the IRS as well as some states allow them to make an offer in compromise to settle their back taxes as well as the associated penalties and interest.Not everybody, however, qualifies for an offer in compromise; for most offers in compromise, the taxpayer must generally show that they do not have the wherewithal to pay their tax debt in full before the government’s time limit to collect the debt runs out.Types of Offers in CompromiseThere are three types of offers in compromise at the federal level:Doubt As to Collectibility Offer in Compromise: This kind of offer in compromise is the most popular kind of offer in compromise.\u00a0 With this kind of offer in compromise, the taxpayer is making the argument to the IRS \u2014 based on their current financial situation \u2014 that they do not have the ability to pay their back tax debt and that the amount they are offering is the most they should reasonably be expected to pay.Doubt As to Liability Offer in Compromise: This kind of compromise involves the taxpayer proving to the government that they don’t actually owe the tax \u2014 or at least not all the tax \u2014 the government believes they owe.Effective Tax Administration Offer in Compromise: This rare kind of offer in compromise involves the taxpayer making the argument to the government that on the basis of concepts such as public policy and economic fairness they should not have to pay the tax that they owe.State offer in compromise programs vary, but most states have some variation of the doubt as to collectibility offer in compromise and the doubt as to liability offer in compromise.Note, however, that because states are generally more aggressive with tax collections and because they generally have longer time limits to collect on tax debt, it is often easier to get a federal offer in compromise approved than a state offer in compromise.How to Get an Offer in Compromise in 8 StepsAt a high level, you get an offer in compromise by submitting certain forms to the taxing authority to whom you are in debt.States have their own forms, but for sake of example, let’s take a look at the process for getting a federal offer in compromise.Step 1: Get in compliance.In order for the IRS to entertain the notion of an offer in compromise, you must be in compliance with your tax returns.Believe it or not, this doesn’t mean you have to have filed\u00a0all of your required tax returns throughout your entire life; it simply means you must have filed the last six years of tax returns to the extent required.Also, because one of the IRS’s main goals with the offer in compromise program is to get people back in the tax system, it will want to see that you are current on making your tax payments for the current tax year.The IRS may be willing to work with you on your back taxes, but it doesn’t want you to keep making the same mistake.Note that if your offer in compromise is accepted, you must be a squeaky-clean taxpayer for at least the following five years or else you may default on your offer and owe all your back taxes again (less what you paid in your offer).Step 2: Make sure you qualify.First, you need to determine which type of offer in compromise you intend to submit and make sure you qualify for that offer type.For all types of offers in compromise, you cannot currently be in bankruptcy.And assuming you’re attempting to submit the most common type of offer in compromise \u2014 doubt as to collectibility \u2014 you need to first make sure you qualify based on your financial circumstances.I’d recommend watching the video below on the offer in compromise formula \u2014 if you work through the formula, you’ll understand whether or not you qualify for a doubt as to collectibility offer in compromise and know what your offer amount will be.As an alternative, you can hire a professional tax relief company to analyze your situation and submit your offer in compromise for you.Step 3: Complete the appropriate forms.The table below shows the forms you have to complete for each of the different kinds of federal offers in compromise..simple_table-40733 table tr th{\ttext-align: center;\t\t}.simple_table-40733 table tr td{\ttext-align: center;\t\t}Types of Offers in CompromiseOffer in Compromise TypeAttach FormsDoubt as to CollectibilityForm 656, Form 433-A (OIC), Possibly Form 433-BDoubt As to LiabilityForm 656-LEffective Tax AdministrationForm 656, Form 433-A (OIC), Possibly Form 433-BStep 4: Attach the necessary documentation.In addition to the forms listed above, here is a list of other documents you may need to attach to your offer in compromise package before mailing it to the IRS:Copies of your most recent pay stub, earnings statement, etc., from each employerCopies of the most recent statement for each investment and retirement accountCopies of the most recent statement, etc., from all other sources of incomeCopies of individual complete bank statements for the three most recent monthsCopies of business complete bank statements for the six most recent monthsCopies of the most recent statement from lender(s) on loans showing monthly payments, loan payoffs, and balancesList of accounts receivable or notes receivable, if applicableVerification of delinquent state or local tax liability showing total delinquent state or local taxes and amount of monthly payments, if applicableCopies of court orders for child support or alimony payments claimed in monthly expense sectionCopies of trust documents if applicableDocumentation to support any special circumstancesForm 2848 if you would like an attorney, CPA, or enrolled agent to represent you and you haven’t previously submitted this form to the IRSNote that the above list is directly from the IRS’s offer in compromise instruction booklet (Form 656-B).Step 5: Attach any necessary payments.Unless you qualify for low-income certification, you will need to submit at least one and perhaps two checks or money orders payable to the United States Treasury.The first payment is your application fee of $205 (this figure is adjusted periodically by the IRS).The second payment is your 20% down payment if you are making a lump-sum cash offer.Step 6: Mail in your offer in compromise package.Your offer in compromise package \u2014 consisting of the forms, documentation, and payments described above \u2014 will be mailed to one of two locations.If you live in Arizona, California, Colorado, Hawaii, Idaho, Kentucky, Mississippi, New Mexico, Nevada, Oklahoma, Oregon, Tennessee, Texas, Utah, or Washington, mail your offer in compromise package to:Memphis IRS Center COIC UnitP.O. Box 30803, AMCMemphis, TN 38130-0803If you live in Alaska, Alabama, Arkansas, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Iowa, Illinois, Indiana, Kansas, Louisiana, Massachusetts, Maryland, Maine, Michigan, Minnesota, Missouri, Montana, North Carolina, North Dakota, Nebraska, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Virginia, Vermont, Wisconsin, West Virginia, Wyoming, or a foreign country, mail your offer in compromise package to:Brookhaven IRS Center COIC UnitP.O. Box 9007Holtsville, NY 11742-9007Step 7: Respond to any IRS inquiries.Unfortunately, the IRS’s offer in compromise processing time is quite lengthy; it can be at least six months before you hear anything from then.That said, you can probably be sure that the IRS will get back to you before 24 months have gone by \u2014 if they haven’t, your offer in compromise is automatically accepted!When the IRS does get back to you, however, make sure to respond promptly to any inquiries they have for you.Step 8: Hope for the best.Remember, an offer in compromise is not guaranteed, but keep a positive attitude and hope for the best as you wait for the IRS to make a final decision on your offer in compromise.Alternatives to an Offer in CompromiseIf you don’t qualify for an offer in compromise, there are other tax debt relief options for you to deal with your tax debt, including:Installment Agreement: This is an agreement with the IRS to pay off your tax debt over time.\u00a0 While most installment agreements are “full payment,” meaning that you will end up paying all you owe to the IRS (including penalties and interest), others are “partial payment,” meaning that you will end up paying less than you owe to the IRS over the course of your payment plan.Currently Not Collectible Status: This is a status the IRS can place you in if you can show extreme financial hardship.\u00a0 While you are in this status, you are not expected to make payments to the IRS, and the IRS’s 10-year clock to collect your tax debt continues to run."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Taxes","item":"https:\/\/moneydoneright.com\/taxes\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"Tax Relief","item":"https:\/\/moneydoneright.com\/taxes\/\/tax-relief\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"What Is an Offer in Compromise?  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