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What is an Offer in Compromise (OIC)?

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OIC is an IRS program that attempts to help taxpayers with financial difficulties to settle their tax debts (and interest and penalties) for a lump sum less than the total amount owed.  This lump sum can be paid in installments over two years (deferred OICs allow for longer payoff times).  Unfortunately, OICs have disadvantages: (1) they are not guaranteed (the IRS does not have to accept an OIC); (2) you must stay current on your taxes while the OIC is being considered by the IRS, a period that often takes between 6 months and one year; and (3) at the time you submit the OIC, you must make a deposit of 20% of the OIC (unless you qualify for the hardship exemption).

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