Pros
- If you have tax debt, an OIC allows you to make a deal with the IRS to settle what you can afford and the balance is forgiven. You'll have no more tax debt to pay and you can start over.
- Salaries and assets can't be seized during review, considerably reducing your stress level.
- The IRS should release tax liens within 30 days when the OIC is accepted and you've paid the balance agreed upon. A Notice of Release of Federal Tax Lien will be filed on public record. This should improve your credit rating.
- For 5 years, you should comply with the provisions of the IRS Code if the IRS accepts your offer.
- When you file an OIC, the statute of limitations for collecting your taxes (ten years) will be extended for the time the Offer is pending plus sixty days. This extension takes effect even if the OIC is not approved. Just be aware that sometimes it may take the IRS a year to review an OIC. An OIC is accepted, though, if it takes the IRS over two years to review your OIC, under new regulations.
- With the acceptance of your OIC, you agree to not contest in court or appeal the amount of your tax debt.
- Tax refunds you may be expecting the calendar year the IRS accepts the OIC, including interest for the period will be forfeited.
- Disclosure of your full financial history is required, which may cause more audits if the IRS finds that you were hiding something.
- By defaulting on your OIC, your back taxes plus interest and penalties will be reinstated in full, not including the payments you have made.
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