An Offer in Compromise (OIC) for Effective Tax Administration (ETA) is less common than other types of offers, but can be effective in certain situations. You should explore an ETA offer after you have considered other, more common tax resolution options and determined that they don’t fit your situation.
Types of Offers in Compromise
You can only use an ETA offer if the other types of OICs don’t apply. The most common OIC is doubt as to collectibility, which is used when you are unable to pay your tax debt in full.
Doubt as to Liability OICs are used when you don’t believe that you actually owe the taxes. This could be because of an IRS error or some other issue.
If neither of these OICs will work for you, an OIC for ETA may be an option.
Effective Tax Administration
So why would the IRS allow an OIC if you owe the taxes and have the ability to pay? Two situations could justify the acceptance of an OIC for ETA—financial hardship or public policy.
The IRS will determine your collection potential based on your disposable income and your equity in assets. If you have the ability to pay back your taxes, but doing so would cause hardship due to special circumstances, you might be able to submit an OIC for ETA.
For example, you have equity in your home that could be used to pay off your tax debt. However, you have a disability that prevents you from working, and you would not be able to afford a replacement residence after paying off your tax debt. This may qualify as a financial hardship that could qualify you for an ETA OIC.
Public policy offers usually relate to erroneous advice from the IRS or a tax professional. If someone else’s criminal conduct caused your tax liability and you took reasonable steps to resolve the issues, public policy may also permit acceptance of an OIC.
Request an Offer in Compromise Consultation
You can learn more about each type of OIC during a consultation with a tax attorney. If you don’t qualify for an OIC, there are many other tax resolution options your attorney can assist you with.
Get help settling your tax debt by calling The Gartzman Law Firm at (770) 939-7710. We can help you protect your assets and find a creative solution to your tax problems.