Offer in Compromise Eligibility

Millions of Americans continue to fall behind on their taxes. According to the Internal Revenue Service Data Book, about 8.4 million Americans owed more than $114 billion in combined past-due taxes, penalties, and interests in 2020. If you owe more to the IRS than you can pay, "offer in compromise" (OIC) is among the available options through which you can achieve tax debt relief. An experienced Georgia tax attorney can review your situation and help you understand the eligibility requirements for an offer in compromise.

At Pytte Law, I'm dedicated to providing knowledgeable legal guidance and strong advocacy to clients in tax law-related matters. As your legal counsel, I can review your tax records, explore your available tax relief options, and determine whether you are eligible for an offer in compromise. Using my extensive experience, I can guide you through every legal phase of the tax resolution process from start to finish. My firm proudly serves clients throughout Savannah, Statesboro, Ludowici, Richmond Hill, Bryan County, Hinesville, and Evans County, Georgia.

What Is an Offer in Compromise?

An offer in compromise is a tax debt resolution option that allows delinquent taxpayers to settle their past-due taxes for less than the full amount they owe. It involves negotiating a settlement arrangement with the tax authorities to offset your back taxes by paying a reduced amount. An offer in compromise may be a legitimate option if you owe more than you can pay or you would struggle financially if you paid the full amount.

Payment Options

There are two payment options available under an offer in compromise: lump sum cash and periodic payment.

Lump-Sum Cash

Under the lump-sum cash option, you will submit an initial payment of 20% of the proposed reduced amount alongside your application for an offer in compromise. The remaining balance may be split over five payments (at most).

Periodic Payment

Through the periodic payment option, you can offset the proposed reduced amount by making monthly payments. You will submit the initial payment with your application for an offer in compromise and continue paying the monthly installments until you fully pay the back taxes.

Who Is Eligible?

Eligibility for an offer in compromise involves a strict process. Before an individual can be approved, the IRS will consider the following factors:

  • Your monthly income
  • Your ability to pay
  • Your expenses and financial obligations
  • Your asset equity
  • Whether paying the full amount will make you struggle financially
  • Whether there is a genuine dispute regarding the amount you owe

Understanding the Process

Here are the processes involved in an offer in compromise application:

Propose a Settlement Offer to the IRS

An offer in compromise starts with the delinquent taxpayer proposing a settlement offer to the IRS using Form 656, Offer in Compromise. You must propose an amount equal to or greater than the value of your assets or equity.

Complete Form 433-A

One of the factors considered by the IRS to determine your eligibility is your ability to pay. Hence, you will have to complete and submit Form 433-A, Collection Information Statement for Wage. Form 433-A is a tax form that collects information about your finances, including any assets and debts you owe.

Submit an Initial Amount

Depending on your preferred payment option (as explained above), you will submit an initial amount with your application.

Here are the possible outcomes:

  • If the IRS doesn't respond within two years, your application for an offer in compromise is automatically approved.
  • If the IRS rejects your application, you may appeal the rejection within 30 days.

Getting the Experienced Legal Support You Need

Failure to file your past-due taxes can expose you to late payment penalties, fines, and interest charges. While the IRS rarely forgives tax debts, an offer in compromise may be a more realistic approach to deal with your back taxes. Therefore, when seeking IRS debt forgiveness through an offer in compromise, you need to speak with an experienced tax attorney for detailed guidance in navigating key decisions.

At Pytte Law, I have the experience and resources to assist and guide clients through the complexities of paying past-due taxes and achieving tax debt relief. As your attorney, I can evaluate your tax records, help you understand your possible options, and determine whether an offer in compromise is right for your financial situation.

Also, I will help you prepare the necessary documentation, submit it, and monitor the progress of your application. Even if the IRS rejects your application, I can help file an appeal or explore other possible options for you to achieve tax debt relief. I can guide you through every phase involved in your application from start to finish.

Call my firm — John E. Pytte | Your Georgia Debt Relief Specialist — today to schedule a simple case assessment with a knowledgeable tax attorney. I can offer you the detailed legal counsel, support, and brilliant advocacy you need to make informed decisions. My firm proudly serves clients throughout Savannah, Statesboro, Ludowici, Richmond Hill, Bryan County, Hinesville, and Evans County, Georgia.


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