Offer In Compromise

A program offered by the IRS to taxpayers who are unable to pay their tax debt. Those who qualify are allowed to make an offer in compromise, which is an offer to pay a lesser amount than that which is owed. The offer in compromise program is intended to allow taxpayers with substantial back taxes to settle their tax debt and start over with a clean slate, so that they can remain current on their taxes in the future.

Taxpayers can find out whether they are eligible for an offer in compromise by consulting the checklist on Form 656 of the offer in compromise IRS package. In order to qualify, taxpayers must fall into at least one of the following three categories:

1) Uncertain Liability - Is tax really owed?
2) Uncertain Collectability - Taxpayer has no way to pay this debt.
3) Economic Hardship - Taxpayer must prove that paying the debt would be unfair or create further hardship.

According to the IRS, taxpayers should beware of promoter's claims that tax debts can be settled for "pennies on the dollar."


Investment dictionary. . 2012.

Look at other dictionaries:

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  • Offer in compromise — The Offer in Compromise (or OIC) program, in the United States, is an Internal Revenue Service (IRS) program under 26 U.S.C. § 7122 which allows qualified individuals with an unpaid tax debt to negotiate a settled amount that is less… …   Wikipedia

  • offer of compromise — An offer to settle a dispute or difference amicably for the purpose of avoiding a lawsuit and without admitting liability. A tender or offer to settle or compromise a claim. The fact that such offer has been made is generally not admissible at… …   Black's law dictionary

  • offer of compromise — A concession by a party to a controversy, such as a reduction in claim, made for the purpose of settlement of the controversy. Daniels v U. S. Rubber Co. (Tex Civ App) 199 SW2d 533 …   Ballentine's law dictionary

  • compromise — com·pro·mise 1 n: an agreement resolving differences by mutual concessions esp. to prevent or end a lawsuit compromise 2 vb mised, mis·ing vt: to resolve or dispose of by a compromise cases in which a dispute is compromised E. A. Farnsworth and W …   Law dictionary

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  • offer — {{Roman}}I.{{/Roman}} noun 1 of help or sth that is needed ADJECTIVE ▪ generous, kind ▪ conditional, unconditional (both esp. BrE) ▪ The company has made a conditional offer. ▪ …   Collocations dictionary

  • counter offer — n.    an offer made in response to a previous offer by the other party during negotiations for a final contract. Making a counter offer automatically rejects the prior offer, and requires an acceptance under the terms of the counter offer or… …   Law dictionary

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