To make a commitment offer, you'll need to submit some forms, provide documentation of your income, and pay the application fee. You may also need to make a down payment, depending on the payment plan you choose. The IRS will calculate the correct amount of the offer. If it's more than you offered and you don't have special circumstances, the IRS will give you the opportunity to increase the offer amount.
If you don't, the offer will be rejected. If the IRS determines that you can pay the full liability, you can request an installment agreement. A commitment offer (OIC) is a payment plan that you can negotiate with the IRS to reduce your tax debt. With an OIC, you propose to pay a smaller amount to the IRS, depending on your ability to pay.
This is a good strategy, but keep in mind that it's not an easy or comfortable process. As a reminder to the reader, an IRS compromise offer (OIC) is a tax agreement with the IRS in which the taxpayer undertakes to pay a specific amount and the IRS agrees to commit the remaining liability. This is how an IRS compromise offer works, what is needed to qualify, and what you should know about the program. As part of the accepted offering agreement, the IRS will keep any refund, including interest, of taxes due until the date the IRS accepts the offer.
First, you should have received a detailed letter from the IRS offering specialist who was assigned to your transaction offer. If a transaction offer is not for you, or if the IRS rejects your transaction offer, you may still have other options through the IRS to obtain tax relief, such as signing up for an installment payment plan or applying for “not currently collectible” status. Announcements about how to settle their tax debt for cents on the dollar generally refer to the process of requesting a commitment offer from the IRS, or OIC, which is an IRS program designed to help people pay at least part of their tax debt. This money is not refundable, even if the IRS rejects your offer (the IRS will only apply it to your tax bill).
Among its many new taxpayer protection provisions, the IRS Restructuring and Reform Act of 1998 introduces several changes applicable to Compromise Offers (some simply codify existing IRS practice). The most important tips for a successful ICO are to pay the offer amount; file all tax returns on time; allow the IRS to keep all tax refunds, payments and credits to reduce your tax liability; and continue to allow the IRS to keep all tax refunds to be paid even after approval by the OIC.
