Offer in Compromise Decision

Offer in Compromise Decision

An Offer in Compromise Decision is a formal determination made by the Internal Revenue Service (IRS) regarding a taxpayer’s proposal to settle their tax debt for less than the total amount owed. This decision is based on the taxpayer’s financial situation, including their income, expenses, and asset equity, and considers whether paying the full tax liability would create financial hardship.

If the IRS accepts the offer, it may allow the taxpayer to resolve their tax liability for a smaller amount, thereby providing relief from overwhelming debt. Conversely, if the offer is rejected, the taxpayer is still responsible for the original amount owed, along with any applicable penalties and interest. The decision is documented in a written notice, detailing the reasons for acceptance or rejection.