Cash Offer in Compromise

Taxpayers must pay cash OICs within 90 days of acceptance. Taxpayers should offer the realizable value of their assets, plus the total amount the IRS could collect over 48 months of payments (or the remainder of the ten-year statutory period for collection, whichever is less).

Note: The IRS requires full payment of accepted doubt as to liability OICs at the time of mutual agreement of the corrected liability. If taxpayers are unable to pay the corrected amount, they must also request compromise on the basis of doubt as to collectibility.

Short-Term Deferred Payment Offer in Compromise

This payment plan requires taxpayers to pay the OIC within two years of acceptance.  The OIC must include the realizable value of the taxpayer's assets, plus the amount the IRS could collect over 60 months of payments (or the remainder of the ten-year statutory period for collection, whichever is less).  The IRS may file a Notice of Federal Tax Lien on tax liabilities compromised under short-term deferred payment OICs.

Taxpayers can pay the short-term deferred payment plan in three ways:

Plan One - Full payment of the realizable value of the taxpayer’s assets within 90 days from the date the IRS accepts the OIC, and payment within two years of acceptance of the amount the IRS could collect over 60 months (future income), or the remaining life of the collection statute, whichever is less.

Plan Two - Cash payment for a portion of the realizable value of the taxpayer’s assets within 90 days from the date the IRS accepts the OIC, and the balance of the realizable value, plus the amount IRS could collect over 60 months (future income), or the remaining life of the collection statute, whichever is less, within two years of acceptance.

Plan Three - The entire OIC amount in monthly payments extending over a period not to exceed two years from date of acceptance (e.g., four payments within 120 days of acceptance).  For example, on a short-term deferred payment total offer of $16,000, taxpayers might propose to pay their realizable value of assets (e.g., $13,000) within 90 days of acceptance and the amount of their future income (e.g., $50 per month for 60 months, or $3,000) over 6 monthly payments of $500 each, beginning with the first month after acceptance.

Deferred Payment Offer in Compromise

This payment plan requires taxpayers to pay the OIC amount over the remaining statutory period for collecting the tax.  The OIC must include the realizable value of the taxpayer's assets, plus the amount the IRS could collect through monthly payments during the remaining life of the collection statute.  The IRS may file a Notice of Federal Tax Lien on tax liabilities compromised under deferred payment OICs.

For wage earners and self-employed individuals who want to submit a deferred payment OIC, the IRS will help them determine the future income amount.  To compute this amount, the IRS must calculate the remaining time left on the collection statute for each period of the tax liability.  Taxpayers can call the IRS at 1-800-829-1040 to get assistance with this calculation.

Taxpayers can pay the deferred payment plan in three ways:

Plan One - Full payment of the realizable value of the taxpayer's assets within 90 days from the date the IRS accepts the OIC, and taxpayer's "future income" in monthly payments during the remaining life of the collection statute.

Plan Two - Cash payment for a portion of the realizable value of the taxpayer's assets within 90 days from the date the IRS accepts the OIC, and taxpayer's monthly payments during the remaining life of the collection statute for both the balance of the realizable value and the taxpayer's future income.

Plan Three - The entire OIC amount in monthly payments over the life of the collection statute.  For example, on a deferred payment OIC with 7 years (84 months) remaining on the statutory period for collection, and a total offer of $25,000, taxpayers might propose to pay their realizable value of assets (e.g., $10,000) within 90 days, and their future income (e.g., $179 per month for 7 years, or $15,000) in 84 monthly installments of $179.  Alternately, they could also pay the same total $25,000 OIC in 84 monthly installments of $298.