Tax Tip 2023-58: An Offer in Compromise can help certain taxpayers resolve tax debt
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Issue Number: Tax Tip 2023-58
An Offer in Compromise can help certain taxpayers resolve tax debt
When a taxpayer can’t pay their full tax liability or if paying would cause financial hardship, they may want to consider applying for an Offer in Compromise. This agreement between a taxpayer and the IRS settles a tax debt for less than the full amount owed. The goal is a compromise that’s in the best interest of both the taxpayer and the agency. The application fee for an offer in compromise is $205. Low-income taxpayers don’t have to pay this fee, and they should check if they meet the definition of low-income in the instructions for Form 656, Offer in Compromise.
When reviewing applications, the IRS considers the taxpayer’s unique set of facts and special circumstances affecting their ability to pay including their:
The Offer in Compromise Booklet has detailed information
The booklet is also available in Spanish. Taxpayers should download and use the latest version of the OIC booklet to avoid processing delays.
Taxpayers can also watch a how-to video series on Offer in Compromise
Taxpayers can see if they’re eligible with the pre-qualifier tool
Beware of offer in compromise mills
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