IRS 2023 Dirty Dozen- Scan #9: Watch out for Offer in Compromise ‘mills’ where promoters claim their services are needed to settle IRS debts (Part B)
IRS 2023 Dirty Dozen – Scam #9: Watch out for Offer in Compromise ‘mills’ where
promoters claim their services are needed to settle IRS debts (Part B)
WHAT TO WATCH OUT FOR: OFFER IN COMPROMISE MILLS
An Offer in Compromise (OIC) is when the taxpayer works with the IRS to settle a tax
debt for less than the full amount owed. It is an option for those unable to pay the full tax
liability or if doing so creates a financial hardship. The IRS takes in consideration each
unique set of facts and circumstances. This agreement can happen directly between the
taxpayer and the IRS without a third party.
An Offer in Compromise “mill” will usually make outlandish claims, frequently in radio
and TV ads, about how they can settle a person’s tax debt for cheap. In reality, the
promoter fees are often excessive, and taxpayers pay the OIC mill to get the same deal
they could have received on their own by working directly with the IRS. This takes
unnecessary money out of the taxpayer’s wallet.
In addition, not every taxpayer will qualify for an OIC. Some promoters knowingly
advise indebted taxpayers to file an OIC application even though the promoters know the
person will not qualify, costing honest taxpayers money and time.
The IRS urges people to take a few minutes to review information on IRS.gov to see if
they might be a good candidate for the OIC program – and avoid costly promoters. As a
first step, a taxpayer can check their OIC eligibility for free using the IRS’s Offer in
Compromise Pre-Qualifier tool . And the IRS reminds taxpayers about the First Time
Penalty Abatement policy, where taxpayers can go directly to the IRS for administrative
relief from a penalty that would otherwise be added to their tax debt.
Next week #10: Schemes Aimed at High-Income Filers
(IRS Web Site (TTT 100323)