IRS to offer new programs to struggling taxpayers

The IRS has recently announced an expansion of its “Fresh Start” Initiative by offering more flexible terms to its OIC (Offer In Compromise) program.  This move is intended to allow financially distressed taxpayers to clear their tax problems in a shorter time period, some times in as little as two years, as compared to four or five.

 An OIC is an agreement between the IRS and a taxpayer that allows the taxpayer to pay less than the amount owed, but it will only be accepted if you can prove that you cannot pay the amount owed either in a lump sum, or over time.

 The good news as that when the IRS calculates a taxpayer’s reasonable collection potential, it will now look at only one year of future income for offers paid in five or fewer months, down from four years, and two years of future income for offers paid in six to 24 months, down from five years. This can result in a huge reduction in how much you have to pay to have your OIC accepted by the IRS.

For full details on the OIC program, see the IRS Form 656 booklet, available at

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