Tuesday, February 12, 2008

Taking the Mystery out of the Offer In Compromise (Part I)

Beware of "promoters' claims that tax debt can be settled for pennies on the dollars through the Offer in Compromise program"... This is a warning issued by the IRS back in Feb. 2004 (See original article).

What is an Offer in Compromise anyway, how does it work and who is it for? An Offer in Compromise or OIC is a program for taxpayers who are unable to pay a tax debt in full and an installment agreement is not an option. It is a lengthy process that should be considered carefully by the taxpayer and a competent advisor (Tax Attorney, CPA or Enrolled Agent). A decission needs to be made whether an OIC is filed for Doubt as to liability, Doubt as to collectibility or Effective tax administration and the amount to be offered.

Why is an OIC so heavily promoted then if so very few people actually qualify for this program? Then answer is very simple, telling people what the would like to hear, also known as earcandy.

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