IRS & Ohio Offer in Compromise

Get a Fresh Start: Resolve Your Federal and Ohio State Tax Liabilities for Less Than You Owe

If you are an individual or business in Ohio struggling with overwhelming tax debt, an Offer in Compromise (OIC) may be the fresh start you need. An OIC is an agreement with a taxing authority (IRS or Ohio Attorney General) to settle your total tax liability, including penalties and interest, for a lower, negotiated amount. As an experienced Ohio tax law firm, we provide the dedicated representation and financial analysis required to craft a strong, compelling OIC application for both federal and state tax debts.

What is an IRS Offer in Compromise (OIC)?

The IRS will accept an Offer in Compromise when it determines that the amount offered is the most they can reasonably expect to collect within a reasonable time—known as the Reasonable Collection Potential (RCP). It is a complex legal process that requires a meticulous review of your financial situation.

The Three Legal Grounds for an IRS Offer in Compromise

An IRS OIC is based on one of three legal grounds:

• Doubt as to Collectibility: You are genuinely unable to pay the full tax debt due to your current income and asset equity. This is the most common basis.
• Doubt as to Liability: You have a genuine dispute that you actually owe the full amount of the tax debt.
• Promotion of Effective Tax Administration (ETA): Although you could technically pay the full amount, doing so would cause you significant economic hardship or would be unfair and inequitable due to exceptional circumstances.

IRS OIC Eligibility Requirements

Before the IRS will even process your OIC, you must meet key eligibility criteria:

• Filing Compliance: You must have filed all required federal tax returns.
• Payment Compliance: You must have made all required estimated tax payments for the current year. If you are an employer, all required federal tax deposits for the current and past two quarters must be made.
• No Open Bankruptcy: You cannot be in an open bankruptcy proceeding.

Ohio State Offer in Compromise

If you owe tax debt to the State of Ohio (such as income tax or business taxes), this liability is collected by the Ohio Attorney General’s Office. Ohio also has a formal Offer in Compromise program that allows the Attorney General to settle a claim for less than the principal tax liability (often waiving interest and penalties).

Qualifying Circumstances for an Ohio OIC

The Ohio Attorney General’s Office will consider an OIC application based on:

1. Economic Hardship (including Innocent Spouse): Requiring full payment would cause a severe economic hardship.
2. Doubt of Collectibility: Similar to the IRS, your assets and income are not sufficient to pay the full amount.
3. Substantial Probability of Refund: In limited instances, a claim that would likely be subject to a refund under state law.

Ohio OIC Filing Requirements

For your claim to be eligible for an Ohio Offer in Compromise:

• The taxes owed must have been certified for collection to the Attorney General’s office for greater than one year.
• The principal tax liability must be greater than $500 (except for innocent spouse cases).
• You must be current with all filing and estimated payment requirements for all state taxes.
• You must not have an administrative appeal pending with the Department of Taxation.

Why Hire an Ohio Tax Attorney for Your Offer in Compromise?

The OIC process is extremely complex, and the IRS and Ohio Attorney General’s Office are skilled negotiators. Tax relief companies often promise unrealistic “pennies on the dollar” settlements that frequently get rejected.

• Accurate RCP Calculation: We meticulously calculate your Reasonable Collection Potential (RCP) using the government’s formulas (Form 433-A or 433-B), maximizing your chance of acceptance.
• Complete Financial Disclosure: We ensure your application package includes all necessary forms (IRS Form 656 and Form 433-A/B) and supporting financial documentation to avoid automatic rejection.
• Tax Compliance Review: We verify your past and current compliance with all federal and state filing requirements—a non-negotiable step for OIC acceptance.
• Negotiation & Appeals: If your offer is rejected, we have the experience to appeal the decision with the IRS Independent Office of Appeals or the appropriate Ohio state agency.
• Collection Protection: Filing a proper OIC application legally suspends most IRS collection activities (liens and levies) while your case is under review, giving you crucial breathing room.

OIC Requirements

Columbus Main Office:

Hours of Operation: