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mmittanck
New Member

How do I make an Offer in Compromise for a lower tax amount? What are chances of having it accepted?

 I retired in 2017.  During 2017 I made a mistake on how I should have taken my IRA distributions and ended up taking a lump sum in January 2018.  Then during the rest of 2018 I took monthly distributions.  So in effect I took double IRA distribution income in 2018.  My federal tax liability for 2018 is about $27,000, where it normally would have been closer to about  $12,000. 

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Accepted Solutions
Coleen3
Intuit Alumni

How do I make an Offer in Compromise for a lower tax amount? What are chances of having it accepted?

Below are the three conditions under which they might accept. The first is not applicable, since you do owe the tax. The second or third, you would have to prove.

Reasons for the Offer

The IRS may accept an OIC based on one of the following reasons:

  • First, the IRS can accept a compromise if there is doubt as to liability. A compromise meets this criteria only when there's a genuine dispute as to the existence or amount of the correct tax debt under the law.
  • Second, the IRS can accept a compromise if there is doubt that the amount owed is fully collectible. Doubt as to collectibility exists in any case where the taxpayer's assets and income are less than the full amount of the tax liability.
  • Third, the IRS can accept a compromise based on effective tax administration. An offer may be accepted based on effective tax administration when there is no doubt that the tax is legally owed and that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.
  • https://www.irs.gov/taxtopics/tc204

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1 Reply
Coleen3
Intuit Alumni

How do I make an Offer in Compromise for a lower tax amount? What are chances of having it accepted?

Below are the three conditions under which they might accept. The first is not applicable, since you do owe the tax. The second or third, you would have to prove.

Reasons for the Offer

The IRS may accept an OIC based on one of the following reasons:

  • First, the IRS can accept a compromise if there is doubt as to liability. A compromise meets this criteria only when there's a genuine dispute as to the existence or amount of the correct tax debt under the law.
  • Second, the IRS can accept a compromise if there is doubt that the amount owed is fully collectible. Doubt as to collectibility exists in any case where the taxpayer's assets and income are less than the full amount of the tax liability.
  • Third, the IRS can accept a compromise based on effective tax administration. An offer may be accepted based on effective tax administration when there is no doubt that the tax is legally owed and that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.
  • https://www.irs.gov/taxtopics/tc204

View solution in original post

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