Under new IRS rules, the IRS has streamlined its Offer-in-Compromise Program to allow the IRS greater flexibility in considering a taxpayer's ability to pay.  

An offer-in-compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt by accepting less than full payment in certain circumstances.  It is submitted using IRS Form 656 and a $150 application fee is required. 

Formerly, taxpayers requesting a periodic payment offer-in-compromise were required to submit the first installment payment with their application.  Thereafter, taxpayers were required to make monthly installment payments while the offer-in-compromise was being considered.

Under the new IRS rules, taxpayers requesting a periodic payment offer-in-compromise are still required to submit the first installment payment, and later monthly installment payments while the offer-in-compromise is considered.  However, taxpayers who qualify as low income or file an offer-in-compromise based solely on doubt as to actual liability for the tax deficiency may receive a waiver of the application fee and partial payment requirements.

Also under the new IRS rules, taxpayers with an annual household income of $100,000 and less than $50,000 in tax liability are now eligible for the Offer-in-Compromise Program.  And to cut down on the processing time of an offer-in-compromise, the IRS will now personally contact taxpayers to get additional information instead of corresponding solely by mail.

Submission and payment rules for taxpayer's requesting a lump sum offer-in-compromise have not changed under the new rules.

If you need help with an IRS Settlement, call Givner & Kaye at (310) 207-8008.