Offer in Compromise - Tips for Choosing a Tax Professional
An Offer in Compromise (OIC) with IRS may allow you to settle outstanding tax debts for less than the full amount owed and get a fresh start. However, despite what you may hear in advertisements, the OIC program is not for everyone. IRS will not accept an offer if you have the ability to pay the debt in full, through installment payments, or by some other means. You should check carefully and explore other payment options before deciding to submit an Offer in Compromise.
If you decide to submit an offer, the forms and instructions are available at the Offer in Compromise link below. If you choose to use a tax professional to prepare and file your offer, protect yourself by selecting a qualified, credentialed tax professional. Here are some points to keep in mind:
- Check the tax professional’s qualifications. Ask your tax professional if they have a valid and current preparer tax identification number (PTIN). Anyone who charges you to help prepare your Offer in Compromise must have a PTIN. Also, not all tax professionals can represent you if the IRS has questions about your submission. Regulations governing practice before the Internal Revenue Service generally limit who can represent you to attorneys, CPAs and enrolled agents. If your tax professional is not an attorney, CPA, or enrolled agent, he or she cannot fully represent you in your collection matter before the IRS.
- Check on the tax professional’s licenses. Ask your tax professional what professional licenses they hold and whether continuing education on IRS collection matters is part of the criteria for maintaining that license.
- Check on the tax professional’s history. Ask your tax professional for references. Also, check to see if they have any history of complaints with the Better Business Bureau. Check on the status of their license and for any disciplinary actions through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Return Preparer Office for all tax professionals.
- Find out about the tax professional’s service fees. It is a violation of ethical rules for your tax professional to charge you an unreasonable fee. Your tax professional also cannot charge you a fee based on how much you are able to reduce your tax liability through the offer process. Do not agree to calculate your fee on this basis. Also, be wary of individuals who claim they can settle your tax debt for an amount that seems significantly less than you reasonably can afford to pay.
- Make sure the tax professional is accessible. Make sure you will be able to contact the tax professional after the offer has been filed in case questions arise.
- Provide your tax professional with all records needed to prepare your offer. Reputable tax professionals will request to see all your current financial records and a complete list of your assets. They also will ask you questions about your income and expenses to determine an appropriate offer amount.
- Never sign a blank tax form. Avoid tax professionals that ask you to sign any blank tax form.
- Review the entire offer before signing it. Before you sign your offer, review it and ask questions. Make sure you understand all the entries, confirm the accuracy of everything on the forms, and are comfortable with the amount being offered before you sign it.
- The tax professional should sign the OIC form and include his or her PTIN. You are responsible for the accuracy of every item on your offer, but your tax professional also should sign the offer, and include their PTIN. If they refuse to sign the offer, ask them why. Be sure to get a copy of the offer for your files.
You can report abusive tax practitioners and suspected tax fraud to the IRS on Form 3949-A (PDF), Information Referral, or by sending a letter to Internal Revenue Service, Fresno, CA 93888. You may also contact the IRS Return Preparer Office, your local or state District Attorney Consumer Fraud Division, or the U.S. Federal Trade Commission.
Links:
Find all you need
to consider and make an offer in Form 656-B, Offer in Compromise Booklet (PDF)
Doubt as to Liability
If you believe there is verifiable doubt that you owe part or all of your tax debt, use Form 656-L, Offer in Compromise Doubt as to Liability (PDF)
Pub. 594: IRS Collection Process
Explains the actions IRS may take to recover taxes owed. Download Pub. 594 (PDF)
