In a recent news release (available here), the Internal Revenue Service ("IRS") warned taxpayers about promoters claiming their services are needed to resolve unpaid taxes owed to the IRS.
"Taxpayers should be cautious of aggressive marketing that can mislead them," said IRS Commissioner Danny Werfel. "Many OIC mills charge steep fees, give false assurances and can take advantage of taxpayers with empty promises that their tax debt will disappear. The result is often good money paid for bad results."
An OIC is a legitimate IRS program. It generally allows eligible, qualifying taxpayers to settle a tax debt (business or individual, as the case may be) for less than the full amount owed. An OIC is a potential option for taxpayers who are unable to pay their full tax liability, or if doing so would create a financial hardship. Access to the program is based on a taxpayer's individual facts and circumstances, and not all taxpayers will qualify.
If a taxpayer does not qualify for an OIC, they may nevertheless qualify for a payment plan or installment agreement, which would allow for payment of the amount owed (plus interest) over an extended period of time. 1
OIC mills are a serious problem for taxpayers seeking genuine tax-debt resolutions, who may be vulnerable to such marketing ploys. Indeed, the issue is so prevalent that the IRS includes OIC mills claiming their services are necessary to resolve tax debts on its annual "dirty dozen" list of harmful tax scams (see IRS News Release, IR-2024-91).
When it comes to federal and state tax debts, there are no magic bullets to make them disappear; nor is there a single form to fill out, or a one-size fits all approach. On occasion, our clients have, unfortunately, been the victims of OIC mills, and engage our tax group for bona fide assistance after having already lost considerable time and money.
Negotiating successful settlements, including OICs, payment plans or installment agreements with the IRS and/or state taxing authorities, is a formal process with specific parameters, eligibility and qualification requirements, including full compliance post-settlement. IRS and similar state programs' requirements are different, and must be addressed accordingly. Thus, properly contesting and negotiating one's tax debt requires a depth of knowledge of all relevant tax laws, legal experience, skills and expertise.
When clients are faced with an onerous tax debt, our tax audit and controversy group – with years of experience dealing with the IRS and state taxing authorities – examine the entirety of the facts and circumstances in order to provide sound legal advice, and craft and execute an appropriate action plan. Our approach generally includes contesting the amount due (i.e., to ensure the amount purportedly owed is correct, if at all – including penalties), as well as negotiating with respect to the taxpayer's ability to pay.
Taxpayers concerned about their ability to pay back, or future taxes should consult with legitimate tax professionals who have the necessary experience and expertise required to advise them properly.
Footnote
1. More details on payment options and methods of payment can be found on the IRS website, under Tax topic no. 202, Tax payment options.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
