The Truth About an IRS Offer In Compromise (OIC)
So you are in trouble with the IRS and you see those commercials on TV and hear those radio advertisements telling you that they can settle your IRS debt for pennies on the dollar. Sounds good, right?
Well, the truth is that the IRS rarely settles for pennies on the dollar. It can happen, I have seen it happen, but its not common.
What these tax resolution companies are typically referring to in their commercials is an Offer in Compromise (OIC). The Offer in Compromise is a collection alternative the IRS can use when its to their advantage. In other words, when the IRS thinks they don't have a chance of getting their money from you they will entertain an OIC.
The IRS accepts about 40% of the submitted offers. To have a chance at the IRS accepting your offer in compromise depends on a number of critical factors with the prime one being your collectibility.
You have to prove it to the IRS that you can't pay the taxes owed. You have to prove your un-collectibility.
Guess how the IRS determines your collectibility? By you throwing yourself under the bus and sending them the information they need to make the determination. If they don't accept your OIC they have your detailed financials and now know what to go after to collect.
I am not advocating that you mislead, omit or withhold information from the IRS. That's just asking for trouble.
What I am telling you is to get professional and experienced representation regarding your IRS tax problem. You could get yourself into a pickle not knowing what you are doing.
Besides the "pennies on the dollar" fallacy, another common misconception I have run into is that people think that the IRS will wheel and deal on what is owed. And that the way to do this is by submitting an OIC.
News flash. It doesn't work that way. It's about collectibility.
Don't make matters worse for yourself by going it alone. Get experienced help.