IRS

The Internal Revenue Service today warned taxpayers about aggressive tax relief companies known as Offer in Compromise (OIC) “mills” that mislead taxpayers into paying exorbitant fees by falsely claiming they can easily eliminate tax debts.

The OIC program does allow some taxpayers to settle their tax liabilities for less than the full amount owed if they meet stringent requirements and cannot pay. However, the IRS says many firms are using deceptive advertising tactics and making inflated promises like resolving tax debts for “pennies on the dollar.”

“These mills try to pull in steep fees while raising false expectations and exploiting vulnerable individuals with promises that tax debt can magically disappear,” said IRS Commissioner Danny Werfel. “The program is legitimate, but it’s not for everyone.”

 

 

What is an Offer In Compromise?

 

An Offer in Compromise is a special agreement with the IRS that allows people who owe significant back taxes and meet strict requirements to settle the debt for less than the full amount owed. To qualify for an OIC, you must be unable to pay the full tax liability, or doing so would create a financial hardship. The IRS examines your assets, equity, income, and expenses to determine if you can pay the full amount.

To help protect the public from OIC mills, the taxpayer advocates at Fresh Start Information created a quick Tax Relief Survey for taxpayers to check their likelihood of OIC eligibility. 

While some reputable tax relief companies do exist to help taxpayers properly navigate options like the OIC program, the IRS cautions taxpayers to thoroughly vet any firm before providing sensitive financial information or paying for services.

 

 

Finding a Trustworthy Tax Relief Provider

 

The IRS acknowledges that for those truly overwhelmed by tax debt, working with a qualified tax expert can provide immense value in understanding options, ensuring full compliance, and negotiating for penalty relief or an acceptable payment plan. However, legitimate tax professionals will be upfront that an OIC is difficult to obtain approval for.

In most states, anyone who prepares tax returns for a fee must be either an attorney, Certified Public Accountant (CPA), or IRS-enrolled agent. Beware of any firms that do not employ these credentialed professionals.

Trustworthy tax relief firms will provide a free initial consultation, clearly explain costs/fees, set realistic expectations about outcomes, and directly employ credentialed tax experts—not simply unqualified sales staff. Legitimate tax firms will have excellent BBB ratings, memberships with recognized accounting or tax organizations, and provide case studies about satisfied clients. You should also verify your tax relief provider has robust privacy safeguards to protect your sensitive data.

With many disreputable OIC mills in the marketplace, you must diligently research tax relief companies to find ethical, transparent partners who can legitimately help resolve IRS debts without unrealistic promises or predatory tactics.

The taxpayer advocates at Fresh Start Information have devised a            60-second survey to help you determine if an OIC may be a possibility for you.

Determinations are not definitive but may provide a framework to better understand your financial situation and likelihood of IRS acceptance. There is no obligation associated with completing this survey.