IR-2021-229, November 17, 2021
WASHINGTON — The Internal Revenue Service today unveiled a new how-to video series enabling taxpayers to avoid potential scams by considering and applying for an Offer in Compromise (OIC) themselves and avoid paying excessive fees to companies advertising outlandish claims.
"We encourage eligible taxpayers in real financial distress to consider looking into an Offer in Compromise to resolve their tax issues," said IRS Commissioner Chuck Rettig. "People also need to use caution with the program. Some companies routinely overstate how they can help with this program and clear up people's back taxes for pennies on the dollar. A quick visit to IRS.gov can provide important information to help people with this program."
An Offer in Compromise allows you to settle your tax debt for less than the full amount you owe if you qualify. It may be a legitimate option if you can't pay your full tax liability or doing so creates a financial hardship. The IRS considers your unique set of facts and circumstances when making that determination. The OIC program serves an important purpose for a select group of taxpayers.
The IRS periodically warns against hiring and paying needless fees to these "Offer in Compromise mills" that contort the IRS program into something it's not and mislead people who have no chance of meeting the requirements while charging excessive fees, often thousands of dollars. OIC mills were listed in the last two annual IRS Dirty Dozen lists of tax scams to avoid.
"I encourage taxpayers who may qualify for an Offer in Compromise to watch these videos and review information on IRS.gov to help them determine if the program is right for them," Rettig said. "Don't go to costly promoters advertising on television or radio who can make overstated claims or suggestions that the IRS will accept an OIC without even reviewing your situation first."
The video playlist marks another improvement for IRS online educational videos by breaking the videos' information out into easy-to-navigate chapters and sections that coincide with the layout of the OIC booklet and forms. It also offers taxpayers the ability to bookmark information they'd like to revisit later. This new OIC video playlist provides:
An overview of the OIC process, forms and pre-qualifier tool for help in getting started
Step-by-step walkthroughs of Forms 433 – A & B OIC, which are known as "collection information statements" and needed for individual and business-related offers
A step-by-step example of how to complete the OIC application, Form 656PDF
And a finalizing checklist to ensure everything needed is included to submit a valid offer
The vast majority of tax professionals are honest and don't make false claims about getting taxpayers special deals that only they can get. Taxpayers should consult a trusted reputable tax professional when needed. The videos and web materials make it easier for taxpayers to navigate the OIC process on their own.
IRS.gov contains complete information on the collection process and payment options. Publication 594, The IRS Collection ProcessPDF, also provides helpful information on the options available to taxpayers. Form 656 BookletPDF provides detailed instructions for submitting an OIC and includes all of the necessary financial forms.
Some taxpayers may not be required to pay the $205 OIC application fee or the required payments, depending on their income and the basis of their offer. Taxpayers can determine if they qualify for the waiver of fees and payment(s) by consulting the Low-Income Guidelines in Form 656. The low-income guideline exception applies only to individuals.
All publications and forms are on IRS.gov or taxpayers may order copies by calling 800-829-3676. All publications and forms are available for free. Taxpayers may feel they need the assistance of a qualified tax professional to prepare and submit an OIC. Taxpayers may contact local or state tax professional associations for enrolled agents, CPAs or attorneys to locate someone who has the education and experience to assist them.