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Reference Materials on OFFER IN COMPROMISE

Below are some additional reference materials on Offers in Compromise.  

 References/Related Topics

IRS Announces More Flexible Offer-in-Compromise Terms ... 8/2012   

   Related Items:

      FAQs for New Offer in Compromise Rules    (copy at 6/2014)

          IRS Offer In Compromise - IRM Provisions:  See Offer in Compromise IRM





Offers in Compromise - IRS Handbook 5.8, Ch.4 - Evaluation of Offers (Internal Revenue Manual Provisions).


OFFERS IN COMPROMISE WITH IRS: hardship, fairness, and equity. Public Policy and promoting Effective Tax Administration.

  • Historically, the Service's compromise authority has been limited to cases in which either doubt as to collectibility or doubt as to liability or both is established. The Internal Revenue Service Restructuring and Reform Act of 1998, however, has expanded the Service's compromise authority. The Service now has the authority to compromise, where appropriate, cases involving issues such as equity, hardship, and public policy. The Service may now compromise cases involving equity and hardship issues where compromise would "promote effective tax administration."

  • The effective tax administration basis for compromise applies only where the taxpayer does not meet the requirements for doubt as to liability or doubt as to collectibility ...

  • Refer to Internal Revenue Manual Provisions.


Temporary regulations that provide additional guidance regarding the compromise of internal revenue taxes. The temporary regulations reflect changes to the law made by the Internal Revenue Service Restructuring and Reform Act of 1998 and the Taxpayer Bill of Rights II. 


11-30-04 Grassley, Baucus Raise Concerns Over Offer in Compromise Program /  IRS Response (Historical items #12 were removed from source link)

IRS Oversight Board Hearing - Effective Collection Strategies (1-2703)



Some case materials on IRS Rejection of Offers in Compromise, and Abuse of Discretion:

COMMISSIONER OF INTERNAL REVENUE, Respondent  Docket No. 15382-03L. Filed March 23, 2005. 

The above limited information is intended for informational purposes only.  If legal advice or other expert assistance is required, the services of a competent professional should be sought, and this general information should not be relied upon without such professional assistance. 

Adobe Acrobat is needed to view the above forms.  A free version of Acrobat Reader is available  by clicking here.

CAUTION: There are many providers of services on the internet who will submit your Offer in Compromise forms. However, such providers merely have you complete the forms. These bargain basement "Offer experts" may be only mailing the forms you prepare to the Internal Revenue Service. Thus, they have done nothing for you. In fact, they may end up costing you more because critical review and analysis has not been done. When completing the financial statement forms and making the Offer, you are painting a financial picture that will determine the amount of an acceptable Offer. Unless your representative has the necessary skills and experience, you may have paid a small fee, only to be subjected to settling for more under the Offer than you otherwise should have. Your professional must have experience in: calculating your income and expenses; determining the amount of the offer you should make; valuing your assets and liabilities;  reviewing joint ownership considerations; working with the tax law and IRS internal procedures; arguing the facts and the law, and negotiating with the IRS. 

The IRS has a history of intimidation, and let's face it, they will take advantage of any taxpayer who represents himself, and even a taxpayer's advocate who is weak. Remember, IRS Offer Specialists generally have "collection" backgrounds and they come at you from the perspective of getting as much money as they can.

In the end analysis, you should measure the benefits you derive from the final result. For a taxpayer to engage someone who merely mails in your Offer forms for a $300.00 fee, what at first blush looked like "such a deal", may in reality end up costing you many thousands of dollars more because you didn't choose a tax professional who would negotiate the best settlement for you.

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