Offer in Compromise

The IRS will not accept an offer unless it is clear that you have complied with all current filing requirements and consulted with an online accountant.

The IRS will not process an OIC for those working as employees unless all unfilled tax returns are filed, although it is not required that you make payment with the tax returns you file. This means that "employees" need to file all unfilled tax returns if you are considering eliminating your tax liability in an OIC. The IRS cannot settle a tax liability for which there is no tax assessment. Filed tax returns are important because they result in an IRS tax assessments. The OIC will function on your aggregate tax liability from the assessments they make against you once those tax returns are filed. For those 1099 persons who are self-employed, the IRS requires that you file quarterly tax returns. Self-employed persons will be considered in compliance (for purposes of filing an OIC) if they file their quarterly tax returns "timely" (e.g. not late in making payment) for the current quarter and the preceding two quarters.

Filing Unfilled Tax Returns Eliminates the Risk of Imprisonment

Section 7203 of the Internal Revenue Code permits the IRS to charge you with the "willful failure to file a tax return." The statute subjects you to a risk of being guilty of a misdemeanor and a $25,000 penalty ($100,000 in the case of a corporation), and imprisoned for not more than one year. If the failure to file is "willful" the charge is a "felony" and the imprisonment is up to five years.

YOU ELIMINATE THE RISK OF IMPRISONMENT IF YOU VOLUNTARILY FILE YOUR TAX RETURNS, and payment of your tax liability.

The IRS will also not process an OIC if you are currently in bankruptcy.