In its continuing effort to help financially distressed taxpayers, the IRS has modified its Offer In Compromise (OIC) program making it more attractive and accessible.
The OIC program allows qualifying taxpayers to settle their tax liability in full for an amount less the full liability owed. The rules for an OIC depend on an IRS computation of the taxpayers’s ability to pay and the taxpayer either does or does not qualify based on this computation. These new administrative rules for the program may provide more access to those who did not previously qualify for an OIC due to IRS computations of future income and equity in assets.
Potentially these relaxed rules will help businesses, taxpayers with state tax liabilities and/or student loan payments, and taxpayers who have been rejected for an OIC in the past due to future income calculations or unfavorable dissipated asset determinations.
This means more financially distressed taxpayers will qualify for an OIC. Furthermore, the amount of the offer in compromise will be less under the new rules. These changes will remove many of the roadblocks in obtaining an OIC.