An IRS Offer in Compromise (IRS OIC) is a settlement offer made by a delinquent taxpayer to settle their IRS tax debt for less than the full amount owed. To be accepted, the offer in compromise must represent the maximum recovery of the tax debt that the IRS can reasonably expect to collect.
Self-prepared offers in compromise have an extremely poor history of acceptance by the IRS, or by state tax agencies with similar settlement programs. Due to the very specific rules and financial parameters the IRS uses to determine the maximum recovery they believe they can collect, self-prepared offers in compromise are prepared without this critical insight, and as a result have very little chance of being accepted. In fact, the vast majority of self-prepared settlement offers are rejected by the IRS.
When prepared correctly, the IRS OIC represents the best opportunity for taxpayers unable to pay their back taxes in full, to settle the obligation and get permanent relief from IRS collection actions.
There really is no substitution for having a licensed tax relief professional prepare and present the settlement offer. With expert knowledge of the IRS Offer in Compromise program, they are able to apply the IRS' financial parameters in the analysis of the tax debt and required financial disclosures, to determine a taxpayer's ability to pay, and qualification for one of the three compromise basis (i.e. Doubt as to Liability, Doubt as to Collectability, or Effective Tax Administration). As a result, an offer in compromise prepared by an experienced tax relief professional has the highest probability of acceptance by the IRS.