IRS Offer In Compromise Settlement

The costs to file an offer in compromise include an application fee of $150. In case the taxpayer has a monthly income below the federal poverty level, payment of the application fee is exempted. The application fee is levied by the IRS to meet the expenditure of processing and reviewing your offer in compromise application.

The application fee has to be remitted either in check or through money order. Application fee is normally not accepted in cash. The check should be payable to the United States’ treasury. Each application should carry a separate check. Checks for several offers together will not be accepted and the application will be rejected.

The application fee is waived in two situations. You are eligible for exemption when the OIC request is based on ‘doubt as to liability’ condition. In case a taxpayer’s monthly income is below federal poverty level established by the Department of Health and Human Services (DHSS), he is exempted from paying the application fee. To determine the possibility of the exemption, the checklist attached to the application form (Form 656) should be referred.

An application for offer in compromise may not succeed in all cases. In case the application is rejected then the fee will be returned. Most applications submitted to the Internal Revenue Service (IRS) are rejected owing to an improper filing of application. Improper filing is often a result of ignorance of the taxpayer. Most taxpayers therefore seek the help of a professional tax consultant when applying for offer in compromise. Tax consultants can also help you manage a lengthy negotiation process. A tax consultant usually charges a fee ranging between $1,500 and $3,000. The cost of filing an offer in compromise can be cut down considerably by using OIC software.