The ultimate goal of an offer-in-compromise is a settlement that is in both the Government's and the
taxpayer's best interest. The IRS will accept an offer-in-compromise to settle unpaid accounts for
less than the amount owed when doubt exists as to whether you owe the liability, or when there is
doubt that the liability can be collected in full and the amount you offer reasonably reflects
collection potential. This may be an alternative for resolving your tax delinquency.
If the basis of an offer is doubt that you owe the liability, for example, a disputed assessment,
you must provide a written statement of supporting evidence. The Service cannot accept a compromise
where the liability has already been decided by a court.
The amount of the offer should at least equal or exceed your equity in all assets. When reviewing an offer,
the IRS considers four factors:
The amount collectible from your assets,
The amount collectible from present and future income,
The amount that can be collectible from 3rd parties, for example, Trust Fund Recovery penalty
and transferee; and
Sources of funds that are available to you but not subject to the Service's collection action.
It is your responsibility to show how acceptance of the offer would be in the best interest of the Government.
Generally, the IRS will not accept an offer unless it is clear that you have complied with all current filing
and paying requirements. The acceptance of an offer creates a "fresh start." Therefore, the terms of the offer
require future compliance with all tax filing and all paying requirements for a period of 5 years. If you do not
abide by all the terms of the offer, including the compliance requirement, the IRS may reinstate the entire
tax liability.
To submit an offer-in-compromise you must complete Form 656; complete instructions are provided
on the form. Also, you must submit Form 433-A Collection Information Statement for Individuals,
or Form 433-B Collection Information Statement for Businesses, if the basis of the offer is in
doubt that the liability can be collected in full. These forms provide a statement of your income,
expenses, assets, and liabilities.
Form 656 Offer in Compromise (Includes Form 433-A and Form 433-B)
Form 656 Offer in Compromise (Can be filled out on-line and printed)
To represent you please download Form 2848
which is a "Power of Attorney" that allows us to represent you in submitting an Offer In Compromise.
This is an on-line form you can fill out, then print and sign then send to us.
If you have any trouble downloading, call us at 800.712.7690 and request the 2001 Form 656 Offer in Compromise package.
It is important to mail the 2001 Form 656 and attachments and Form 2848 to:
Alvin Brown & Associates
PO Box 2393
Fairfax, VA 22031-2393
After the forms are received, you will be consulted to make sure that the Offer does not include any amount more than
necessary to justify abatement of your tax liability.
Only send in the originals with your original signatures. Do Not fax any forms to our office unless instructed otherwise.
IMPORTANT NOTE: Do not overlook the fact that your tax liability can be eliminated 100% in
three ways:
- Doubt as to Collectibility
- Doubt exists that you could ever pay the full amount of tax owed.
- Doubt as to Liability
- Doubt exists that the assessed tax is correct.
- Effective Tax Administration
- There is no doubt the tax is correct and no doubt the amount owed could be
collected, but an "exceptional circumstance" exists that allows the IRS to consider the offer. To be eligible for a
compromise on this basis, you must demonstrate that collection of the tax would create an "economic hardship" or
would be "unfair and inequitable."
Effective Tax Administration is based upon a "hardship" concept and is illustrated in some very complex Treasury
tax regulations. Do not trust the interpretation of these difficult regulations to an accountant or enrolled agent. A
tax attorney representative is essential because basis for abatement of all tax under this provision requires an understanding
of the new tax policy, the intent of Congress, the Committee Reports to the IRS Tax Reform and Restructuring Act of 1998,
as well as the very complex tax regulations. The tax policy must be aggressively presented to the IRS OIC Specialist because the
law is new and it is necessary to educate the OIC Specialist on the correct interpretation of the new Treasury regulations.
Alvin S. Brown & Associates handles the difficult OIC cases with facility because we have active ongoing OIC cases
throughout the United States and unparalleled experience and expertise in all facets of the complex OIC tax law, regulations,
and tax policy.
