IRS To Charge For OIC Applications

by Mike Godfrey, Tax-News.com, Washington

19 August 2003

The IRS has announced that it will apply a $150 fee to applications for the processing of offers in compromise, in a bid to offset the costs of providing this service and cut down on frivolous claims.

An offer in compromise is an agreement between the IRS and the taxpayer that seeks to resolve the latter's tax liability, and in certain circumstances, the Revenue has the discretion to settle a tax dispute by accepting less than the full amount owed.

By applying a charge for the OIC facility, the IRS is hoping to cut down on the number of such applications which are filed inappropriately, a ploy it says is often used by taxpayers as a delaying tactic.

"All taxpayers who file an OIC will have to pay the application fee with their submission unless the offer is based solely on doubt as to liability, or the taxpayer’s total monthly income falls at or below income levels based on the Department of Health and Human Services poverty guidelines," the revenue authority explained in a statement.

The new charge will come into force on November 1 this year.

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