Tax forms spread out on a table with a pen on top. A black coffee cup sits in the background.

The Internal Revenue Service has the authority to consider and accept an Offer in Compromise (“OIC”) as a means of resolving a taxpayer’s outstanding tax liabilities. This power is derived from the provisions outlined in Section 7122 of the Internal Revenue Code.

Section 7122 grants the IRS the discretion to enter into an OIC, which is a settlement agreement between the taxpayer and the IRS. Through this arrangement, eligible taxpayers can propose to pay a reduced amount to settle their tax debt, taking into account their financial situation, income, expenses, and assets.

By accepting an OIC, the IRS demonstrates its willingness to work with taxpayers who are facing financial hardships and may not have the means to pay their entire tax debt. This provision aims to provide a viable solution for taxpayers burdened by overwhelming tax liabilities, allowing them to settle their debts for a compromised amount.

It is essential for individuals considering an OIC to understand the specific criteria and requirements set forth by the IRS. I offer professional advice and guidance to help you navigate the OIC process, and increase the chances of a successful resolution.