Offer in Compromise Pros Cons (2024)

Pros and Cons of an Offer in Compromise

What are the Pros and Cons of an Offer in Compromise? If you have having difficulty paying your taxes, then an Offer in Compromise probably sounds like a pretty good deal – you can submit a few forms to the IRS, and before you know it your tax liability will be reduced substantially. That said, depending upon your financial situation, settling with the IRS through an Offer in Compromise may be second-best to a number of other options that you may want to consider.

First, the IRS requirements for accepting Offers in Compromise are fairly stringent, and require you to have a very low monthly income and basically no assets whatsoever. Thus, you may end up wasting time and money on trying to settling with the IRS when that effort could have been applied toward a better method of resolving your tax liability.

Additionally, it is important to keep in mind that the IRS cannot collect taxes from you forever; the Collection Statute Expiration Date (CSED) prevents the IRS from collecting taxes from you after 10 years. While that might be great news for some people, the IRS’ consideration of an Offer in Compromise “tolls” the CSED, basically freezing it in place while your submission is reviewed. In other words, if you have an older liability, it might be a bad idea pursue an Offer in Compromise because the CESD is about to expire. Finally, if you do successfully obtain an Offer in Compromise, you will need to be perfectly tax compliant for the next five years.

Of course, there are upsides to pursuing an Offer in Compromise as well. Aside from the most obvious of these—that the process has the potential to substantially reduce your tax liability to levels consistent with your financial ability to pay—an Offer in Compromise will put the collection activities of other creditors on hold. That said, ongoing collection activities such as garnishment of wages that began before the filing of the Offer in Compromise may continue after the filing.

When considering all of this, you should keep in mind that you can only weigh the pros and cons of Offers in Compromise in the context of the other options available to you: if you don’t pursue and Offer in Compromise, what will you do instead?

Vying for currently non-collectible status will allow you to be taken out of collections without fear of levy or garnishment, and you will not have to pay down your liability. However, the federal tax lien may be filed against you at any time, most likely the moment you have enough money to satisfy the original tax obligation, and frequent reviews of your uncollectible status might result in your removal from that status at any time.

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I have been a tax client of RJS Law for nearly 10 years. Mr. Shamoun and his team have always delivered results above and beyond my expectations. My attorney has always been just a phone call away when I need advice. I would highly recommend RJS Law to anyone in need of representation for tax related matters!- Brad

My grandmother and I called RJS LAW because she fell behind on her business taxes. She no longer owns the business so she wanted to get back on track and settle that debt. Brendan was very informative and very helpful. We set up a consultation and everyone at the firm was very polite. Brendan helped us create a plan so that we can get resolution to the problem. He helped turn this insurmountable issue into something manageable going forward. I highly recommend this place! - Deana

With no doubt I have to say I have the best advice going forward. I was in the military residing from California but I was stationed in Texas and I didn’t know my filing requirements. Not only I got my questions answered by they gave me free knowledge that I wouldn’t ever had known. I feel comfortable with filing now and going forward I will know what’s best for me. The best thing I liked about this firm is that they answered right away! Transferred my call to an attorney and got it done! In no time! Highly professional and helpful! - Karla

We worked with Brad Paladini on an appeal for an Offer in Compromise we previously submitted on our own. Looking back we should have hired RJS BEFORE we tried submitting an OIC on our own. Brad was amazing to work with on the OIC appeal and literally saved us over $100,000 in taxes. Didn’t show any judgement, took over all the IRS communications and helped us get all the paperwork the IRS was requesting. He fought for us like a bulldog to win the appeal. We are so thankful we found RJS LAW through Yelp and decided to write a review to pay it forward! - Holly

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