Offer in Compromise - Tax Settlement Agreement

Tax Settlement Options

Offer in Compromise Defense

The IRS Offer in Compromise is an established legal method to settle past-due tax debts with the IRS for less than owed.

Offer in Compromise: Settle Your Tax Debt for Less Than Owed

An Offer in Compromise (OIC) is an agreement with the IRS that allows you to settle your tax debt for less than the full amount owed — providing the fresh start you need to move forward with your life.

Michelle Turpin, P.C. are Offer in Compromise specialists with over 100 years of cumulative experience exclusively practicing tax law. Our experienced tax attorneys have successfully helped thousands of taxpayers throughout Utah and across the United States resolve their tax problems permanently.

The Three Types of Offer in Compromise

1. Doubt as to Collectibility

This is the most common type. This applies when you cannot pay your full tax liability within the time the IRS has to collect the debt. The IRS evaluates your Reasonable Collection Potential (RCP) — including disposable income and asset equity.

2. Doubt as to Liability

Applies when there is genuine uncertainty about whether you legally owe the tax debt. This might occur when the IRS made errors in calculating your liability or when there are legitimate grounds to dispute the assessment.

3. Effective Tax Administration (ETA)

Available in situations where you can technically pay the full amount owed, but doing so would create severe economic hardship or would be grossly unfair due to exceptional circumstances.

Qualification Criteria & Financial Analysis

The IRS applies rigorous formulas when evaluating Offer in Compromise submissions:

Ability to Pay: Monthly disposable income multiplied by statutory allowable multipliers.
Asset Equity: Quick Sale Value (QSV) of real estate, vehicles, bank balances, and investments.
Allowable Expenses: Strict adherence to IRS National and Local Standards for housing, transportation, and living costs.
Compliance Verification: Prior 6 years of tax returns must be filed and all estimated payments current.