2011 Changes to the IRS Offer in Compromise

For any Attorneys, CPAs, or Enrolled Agents looking to pursue resolutions and offers in comprise for their clients or potential clients in 2011, large growth in the resolution industry is a possibility.

The law for offers in compromise, as of right now, requires taxpayers to make certain nonrefundable payments with any initial offer in compromise submission. This new provision was introduced in 2006 and required taxpayers who request certain lump-sum offers in compromise to pay 20% of the offer amount with the initial request. In the case of an offer in compromise involving periodic payments, the initial offer must be accompanied by a nonrefundable payment equal to the first installment payment, and the nonrefundable installments must be continued while the offer is reviewed by the IRS.

The offer-in-compromise program is designed to settle cases in which taxpayers have demonstrated an inability to pay the full amount of a tax liability. The current law creates an opportunity for taxpayers who would like to pursue an offer in compromise but are not willing or are unable to pay the initial sums due.

As written in the Administrations fiscal year 2011 revenue proposals. The new proposal would eliminate the requirements that an initial offer in compromise submission include a nonrefundable payment of any portion of the taxpayer's offer. The proposal would be effective for offers in compromise submitted after the date of enactment.

With this change, Attorneys, CPAs, and Enrolled Agents will potentially see a large increase in taxpayers willing and able to begin the resolution process with the IRS. Continual changes such as this are why every Enrolled Agent should go through routine EA training or take an Enrolled Agent course that reviews IRS collection procedures at least once a year.

Fast Forward Academy is a leading publisher of education for enrolled agents and tax professionals. Access to free questions for the enrolled agent exam is available on their website.