OIC Straight Talk

During the fiscal year ended September 30, 2002, less than 1% of all delinquent federal tax accounts were resolved through the IRS's acceptance of an Offer in Compromise.

IRS Executive Cheryl Sherwood in a speech to tax professionals at the IRS Nationwide Tax Forum, Atlanta, Georgia, August 5, 2003
During the fiscal year ended September 30, 2001, the IRS received a total of 124,033 Offers in Compromise, of which 29,140 (about 23%) were accepted. In the following fiscal year, the IRS received a total of 127,769 Offers, of which only 21,570 (about 17%) were accepted.

Wall Street Journal, November 6, 2003

Therefore, the IRS received 3736 more Offers in Compromise in fiscal year 2002 than in fiscal year 2001, yet it accepted 7570 fewer of them.

Why is the IRS accepting fewer OICs?
According to IRS Executive Dale Hart, the director of the IRS division which administers the OIC program, the IRS is receiving too many unacceptable OICs. Director Hart blames this flood of unacceptable Offers on "advertising claims that IRS debts can be settled for pennies on the dollar." Additionally, Director Hart issued this warning: The firms which make "misleading claims" often charge "excessive fees" for handling a client's OIC (Wall Street Journal, November 6, 2003).


	Michael L. Davis Enrolled Agent, OIC Specialist

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	OIC Facts During the fiscal year ended September 30, 2002, less than 1% of all delinquent federal tax accounts were resolved through the IRS's acceptance of an Offer in Compromise. IRS Executive Cheryl Sherwood in a speech to tax professionals at the IRS Nationwide Tax Forum, Atlanta, Georgia, August 5, 2003 During the fiscal year ended September 30, 2001, the IRS received a total of 124,033 Offers in Compromise, of which 29,140 (about 23%) were accepted. In the following fiscal year, the IRS received a total of 127,769 Offers, of which only 21,570 (about 17%) were accepted. Wall Street Journal, November 6, 2003 Therefore, the IRS received 3736 more Offers in Compromise in fiscal year 2002 than in fiscal year 2001, yet it accepted 7570 fewer of them. Why is the IRS accepting fewer OICs? According to IRS Executive Dale Hart, the director of the IRS division which administers the OIC program, the IRS is receiving too many unacceptable OICs. Director Hart blames this flood of unacceptable Offers on "advertising claims that IRS debts can be settled for pennies on the dollar." Additionally, Director Hart issued this warning: The firms which make "misleading claims" often charge "excessive fees" for handling a client's OIC (Wall Street Journal, November 6, 2003).	OICs Most OICs are based on a taxpayer's inability to pay the full amount owed to the IRS, or, alternatively, that paying the full amount will leave the taxpayer in dire financial hardship. The IRS uses extensive guidelines and standards for determining ability to pay and identifying potential hardship cases. A thorough knowledge of these guidelines and standards is absolutely essential for submitting a potentially acceptable OIC.

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