As the old saying goes: When something sounds too good to be true, it probably is. Taxpayers with outstanding tax bills may be tempted by businesses who advertise and offer to help them reduce their tax debt. These businesses, often called Offer in Compromise mills, make huge claims about reducing unpaid taxes for pennies on the dollar. Unfortunately, these companies many times do not deliver and charge large fees.

An Offer in Compromise with the IRS can help some taxpayers who cannot pay their tax bill.

An Offer in Compromise is an agreement between a taxpayer and the IRS that settles a tax debt for less than the full amount owed. The offer program gives eligible taxpayers a path toward paying off their debt when they otherwise could not or would face financial hardship.

The OIC mills that are dishonest take advantage of taxpayers’ lack of knowledge to make a quick buck.

These OIC mills urge people to hire their company to file an OIC application, even though the taxpayer will not qualify. They often charge big fees to prepare applications that they know the IRS will deny. This unfair practice wastes taxpayers’ time and money.

Taxpayers who do qualify for an OIC can get the same deal working directly with the IRS, without the extra fees.

The OIC mills that are dishonest are a problem all year long, but they step up their advertising after the filing season ends, when taxpayers are trying to resolve their tax issues.

Here is What Taxpayers Considering an OIC Should Know:

  • Individual taxpayers can use the IRS’s Offer in Compromise Pre-Qualifier tool to see if they are eligible.
  • When a taxpayer is ready to apply, he or she can watch an OIC video playlist that will explain the steps and forms used to calculate an appropriate offer based on the taxpayer’s assets, income, expenses, and future earning potential.
  • Taxpayers must make an offer based on their true ability to pay.
  • Applying does not guarantee that the IRS will accept the taxpayer’s offer.

For more information about Offers in Compromise or any tax issue, contact Johnson Duffie at 717-761-4540 or [email protected]