When applying for an OIC, the government expects you to provide the realizable value of your monetary assets, such as investments, cash and life insurance cash value along with the realizable value of your non-monetary assets, such as cars, real property and personal assets. Rough approximations will not satisfy the IRS. The information that you provide on the OIC application must be honest, complete and accurate and, even if your offer in compromise is rejected, be aware that the information you submit can still be used by the IRS if it chooses to escalate collection efforts against you.
An offer in compromise (OIC) is an agreement between the taxpayer and the IRS that settles the taxpayer's tax liabilities for less than the full amount owed. The IRS considers a number of factors and circumstances when considering an OIC -- including the individual's ability to pay the tax within the statute of limitations, which is ten years.
An Offer in Compromise allows you to settle your tax debt for less than the total amount you owe. It may be a viable option if you can't pay your full tax liability, or if you were to pay in full would create a financial hardship. The IRS will consider your unique set of personal and family circumstances including ability to pay, income, expenses, and asset equity. The IRS states that it will "generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time."
There are benefits to filing for an OIC. If the offer is accepted, enforced collection will be eliminated and tax liens will be removed. However, even with the new IRS Fresh Start Initiative, the majority of offers are not accepted, so it's wise to consider using a tax relief specialist, or tax attorney when filing an OIC. Even if you do use the services of a tax professional, check their credentials, BBB accreditation and reputation carefully as there are unscrupulous companies who charge high fees for "filing" offers in compromise that have little chance of being accepted and should never have been filed in the first place.