EBusiness Esq

E Commerce Internet Lawyer 1800 Chapel Avenue West, Suite 128
Cherry Hill, NJ 08002 USA
(856) 665-2121  
Some businesses overpay the government...but certainly not our clients!
Tax Help

LLCs, Corporations, Partnerships

Business Issues

Business Start-ups

E-Business Issues

Index to Site

Current Newsletter

Legal Notices

Home Page

Check out Our

The IRS Can Make Offers in Compromise

IRC Section 7122 authorizes the Internal Revenue Service to compromise any civil or criminal case arising under the internal revenue laws unless it has been referred to the Department of Justice for prosecution or defense. The Internal Revenue Service may compromise any tax controversy when there is doubt as to tax liability or collectibility. Compromise results in taxpayer paying less than asserted liability and closes taxpayer's entire tax liability for covered period. A compromise may be set aside in limited circumstances.

What is an Offer in Compromise

A compromise is a particular type of settlement of a tax controversy. Compromises usually take place at the collection stage. They are agreements between the Internal Revenue Service and a taxpayer allowing the taxpayer to pay the government less in taxes than his asserted tax liability. Compromises are governed by the rules applicable to contracts.

Grounds for an Offer in Compromise

The Internal Revenue Service has complete discretion whether to enter into a compromise, and will entertain an offer in compromise only if it is based on one or both of the following grounds:
  1. doubt as to the taxpayer's liability for the tax;
  2. doubt as to the collectibility of the tax.
Most compromises allow a taxpayer to pay the government less in taxes than owed, and are based on the taxpayer's inability to pay the admitted tax liability (including penalties and interest).

Covers All Tax Matters

A compromise is generally not limited to one issue or transaction. Rather, a compromise is deemed to close the taxpayer's entire tax liability for the period covered, including liability for taxes,  penalties, and interest. Thus, compromise as to part of a tax liability  (a penalty, for example) may have the result of foreclosing the right to dispute other parts of the tax liability.

To find out How to Obtain an Offer in Compromise....

Our Partners Tax LawyerTaxEsq Tax Law Information Virtual Business Group
Virtual Business Group

©Copyright 2000 Ronald J. Cappuccio, J.D., LL.M.(Tax) All Rights Reserved