Offers in Compromise

What is an Offer in Compromise?

When the Internal Revenue Service and a taxpayer, either a person or business, agree to settle the outstanding tax liability for a certain amount, an Offer in Compromise has been reached. An OIC is the ultimate in tax relief. When accepted, you pay what you can afford to pay, not what you owe, unlike an Installment Agreement. We pride ourselves in arranging such tax settlements.

Why does the IRS consider an OIC?

Two major reasons exist for an OIC:

1. Doubt as to Collectability. As implied, there is doubt as to whether the IRS will be able to collect the full amount that you owe. This is the most common basis for Offers in Compromise.

2. Doubt as to Liability. This becomes a basis for an OIC where there is a legitimate dispute as to whether the tax is owed.

Doubt as to Collectability

Two things determine what is paid the IRS:

(1) Your net worth; and

(2) Your earnings compared to your expenses.

While it may seem straight forward, getting an OIC accepted is a complex matter. The IRS must be convinced that you cannot pay the tax liability before it will give up its collection rights.

Once the amount of the OIC is determined, there are two methods to fund a settlement. First is simply paying cash within 90 days of the offer’s acceptance. And second is a deferred payment plan, usually paid in installments over two years.

In 2006, only about 15% of Offers in Compromise were accepted. You increase your chances significantly by partnering with a Nevada tax attorney fighting on your behalf. Working closely with you, we aggressively represent you to convince the IRS to accept your Offer in Compromise, by:

  • Collecting the information necessary to submit your OIC package
  • Preparing the documentation required to submit your package
  • Submitting the OIC package at the proper time and in the best location possible
  • Responding to subsequent requests for more information
  • Negotiating to settle your matter for as little as possible
  • Appealing your case if it is rejected
  • Filing a court action in certain situations to urge acceptance of the OIC

As you can imagine, this long process can take up to a year for the IRS to make a decision, during which time the IRS carefully reviews all of the information provided. They may even request additional information several times.

While your OIC request is pending, the IRS will stop collection activities such as wage garnishments, wage levies, and bank levies. Once filed, you can obtain a levy release or even possibly stop making payments on an installment agreement.

Can You Really Settle for Pennies on the Dollar?

Once an IRS lien is filed against you, advertisements from all over will fill your mailbox. They claim to be able to settle your taxes for “pennies on the dollar.” You may have even seen or heard ads on television, the radio, or elsewhere, making similar claims.

Is this possible? Based upon recent IRS statistics, the average discount on accepted OICs was 88%. But, getting the OIC accepted is not so easy. If you attempt the OIC by yourself, you have over a 90% of failure.

Should you respond to a National Organization’s advertisement? If you do, they will charge you $3,500 to $6,000 to represent you before even knowing whether you qualify for an Offer in Compromise. Once these organizations are paid, they “go through the process,” and then are tell the client, “Sorry, but your OIC just wasn’t accepted by the IRS.” A year later and thousands of dollars poorer, the ripped off victims are often in much worse shape than when they started.

Many of the national “tax resolution” companies that you may have heard of have many BBB complaints and a number of them have paid large settlements in lawsuits filed against them. The following are common examples:

American Tax Relief

Roni Deutch

JK Harris

Omni Financial

Nationwide Tax Relief

The reality is that the IRS is only going to accept an OIC with a very good reason and if certain requirements are met.

Is an Attorney needed for your OIC?

Only about 10% – 15% of Offers In Compromise are accepted in any given year. Why so few? The majority of the applications are simply filled out wrong, or the applicant does not meet the specific criteria of the IRS.

To increase your chance of having your OIC accepted, you should use an honest, qualified attorney.

At Gerrard Cox Larsen, it won’t cost you a penny to meet and see whether we can help you. At the FREE initial meeting, we will discuss your situation and we will be up front with you about our fees if you decide to hire us. We’ll let you know whether or not we can help you, lay out what you can expect to happen, and keep you informed along the way.

Either way, you’ll leave knowing what your options are, whether you hire us or not. There is nothing to lose by meeting. However, there may be much to lose if you do nothing.

For a Free, No Obligation Consultation, contact us:

Please fill out our online form and find out what we can do to assist you.
Or call us at: 702.796.4000

From our offices in Henderson and Las Vegas, our Nevada tax attorneys will provide the highest quality legal services to clients with IRS problems.

Remember, even if an Offer in Compromise is not right for you, there are other options. Some of our other services include:

  • Levy Release
  • Installment Agreements
  • Innocent Spouse
  • Offers in Compromise
  • Appeals
  • Tax Court Representation
  • Penalty Relief

So, if you can imagine getting the IRS off your back . . . without having to speak directly with the IRS yourself, contact us now.

Please fill out our online form, or call to schedule your free initial consultation. Payment plans are available if needed.