Offer In Compromise Case Study

Posted on February 28, 2014

An Offer in Compromise is where you “cut a deal” with the IRS and pay less than what you owe.  

If the IRS believes that you can pay more than what you have offered in an Offer in Compromise Based Upon Doubt as to Collectibility, the IRS can reject your Offer in Compromise.  

There are other instances where the IRS can reject your Offer in Compromise if it believes that accepting your Offer is not in the best of interest of the government or if accepting your Offer would be against public policy insofar as it would be detrimental to the fair administration of the tax code.  These public policy-type rejections can be made even if the amount offered is greater than the amount that can be collected by other means.  

One of our clients opened, then closed, three successive corporations, each of which had unpaid employment tax liabilities.  The IRS subsequently assessed the Trust Fund Recovery Penalty against our client related to these failed businesses.  Our client owed approximately $1.7 million to the IRS related to the failed businesses and had unpaid 1040 liability as well.  

We subsequently filed an Offer in Compromise on behalf of our client.  Although the IRS agreed that the amount we had offered was more than they would ever collect, the IRS initially proposed to reject our client’s Offer in Compromise based upon public policy grounds. The IRS reasoned that our client had acted egregiously in opening and closing three businesses in a row, each of which had unpaid tax liability.  

We filed an Appeal of the IRS’ rejection of our Offer in Compromise and subsequently settled the case for $100,000.00.  

Are you interested in an Offer in Compromise? Call us, we can help.  


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