Have You Seen Ads For Companies Offering To Fix Your IRS Debts? Be Careful!
For certain people who owe the IRS, the Offer in Compromise (OIC) program is useful in resolving that debt. The OIC program allows eligible taxpayers to settle their IRS debts for a lower amount, sometimes considerably lower.
Because the program offers an opportunity to settle tax debts for a fraction of what is owed, greedy companies seeking to profit from financially distressed taxpayers often misuse it. These companies sometimes refer to an Offer in Compromise as the IRS’s “Fresh Start” program or say that there is a “new IRS program” that people can take advantage of.
These so-called “tax resolution” companies, which are sometimes also called "OIC mills" or “offer mills,” advertise aggressively. You’ve seen the billboards along the highway and heard the ads on the radio. They make wild claims, saying they can get your tax debt forgiven for pennies on the dollar. If, of course, you pay for their services.
The only way you can be eligible to settle an IRS debt for so little is if you can’t even afford to pay one of these companies what they want to charge you!
These OIC mills don't tell you that the OIC process has a lot of technical qualifications that disqualify many people from the program. Also, an OIC requires a lot of financial information from you, so you basically end up doing all the work anyway. These OIC mills are essentially making you pay a lot of money for something you can do yourself for free! Sometimes, these tax resolution companies don’t even do what they tell you they will do, but they still take your money.
The IRS has a free online OIC pre-qualifier tool here. Taxpayers can enter their income, expense, and asset information and figure out if they qualify for the OIC program in the first place. Even if you qualify for the OIC program, you are still best off avoiding an OIC mill.
OIC mills charge crazy fees, sometimes as much as 20% of what you owe the IRS. This money would be better spent paying the IRS than paying a tax resolution company. These companies take advantage of the stress an IRS debt puts on you and the promise of fixing it to get you to agree to pay.
If you've already used the pre-qualifier tool and think you qualify, or you have an IRS debt and would like help finding out, some places might be able to help you through the OIC process at no charge. Low-Income Taxpayer Clinics (LITCs) are free legal service providers that can assist taxpayers with the OIC program and other IRS problems. You can find an LITC near you here.
If you live in Philadelphia, you can contact PLA's Taxpayer Support Clinic by calling our intake at 215-981-3800 between 9:30am and 12pm Monday through Thursday or apply online at philalegal.org/apply.
