Taking number nine of the Dirty Dozen list provided by the IRS is watching out for Offer in Compromise (OIC). These scams often mislead honest taxpayers to believe their services are needed so taxpayers can settle a tax debt for steep discounts.
Offer in Compromise (OIC) is a program that helps people who cannot pay to settle their federal tax debts. It’s important to note that the IRS sees the situation many times where the taxpayer does not actually meet the requirements for an offer, but faces excessive fees from promoters for false OIC claims. This is due to misleading taxpayers to believe they meet the qualifications, which in alternative, can cost the taxpayer thousands of dollars.
Taxpayers are able to check their OIC eligibility for free using the IRS’s Offer in Compromise Pre-Qualifier tool. The IRS Commissioner, Danny Werfel said “This is a legitimate IRS program, but there are specific requirements for people to qualify. People desperate for help can make a costly mistake if they clearly don’t qualify for the program”. The IRS takes in consideration each unique set of facts and circumstances pertaining to the taxpayer.
The OIC agreement can happen between the IRS and the taxpayer, without a third-party involved. The third-party scammers tend to make outlandish claims in radio and television ads about their abilities to settle a taxpayer’s debt for cheap. It’s commonly found that in reality, the false promoters fees are excessive and taxpayers pay scammers to get the same deal they could have received on their own by working directly with the IRS.
Please note that there are requirements to qualify for an OIC and not every taxpayer is eligible. Scammers will promote an OIC to taxpayers they know do not qualify, costing them valuable time and money.
To check if you or someone you know would be a good candidate for the OIC program, review information on IRS.gov. If you believe you have fallen victim to a tax scam you can report an abusive tax scheme to the IRS Whistleblower Office for a possible monetary reward.