What are the Pros and Disadvantages of an OIC?

A solution you may like to think about to help you address your IRS issues is to file an Offer in Compromise or OIC.

Advantages

• You can negotiate a deal with the IRS to allow you to pay what you can afford of your back taxes while the rest is forgotten. This allows you to, in effect, begin your financial life over with no back taxes left to pay.
• Your assets and salaries can't be seized while on review. Your stress should be lessened somewhat.
• Your credit rating should improve if the OIC is accepted and you've honored your end of the agreement because your public record will include a Notice of Release of Federal Tax Lien within thirty days.

Disadvantages

• Your OIC will be public record for one year, giving anybody access to your financial information that might cause you problems.
• For 5 years from the date the IRS accepts your offer, compliance with the provisions of the IRS Code pertaining to paying taxes and filing returns is a must.
• The ten-year statute of limitations for collecting taxes is extended for the time the Offer is pending plus 60 days when you file an OIC. Even if your OIC is rejected, the extension takes effect. Just be aware that it can take the IRS one year to review an OIC. The good news is that, under new regulations, if it takes the IRS over two years to review the OIC, it's deemed accepted!
• You agree not to appeal or question the amount of your tax liability with the acceptace of your OIC.
• You lose all tax refunds, including interest for the tax periods that extends through the calendar year that the IRS accepts the OIC.
• The IRS requires full disclosure of your entire financial history. Not disclosing something on your OIC forms will give the IRS cause to audit you.
• If you default on your OIC, the original back taxes you owed plus penalties and interest will be reinstated in full. The payments you made will be credited, though.

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