Can a business make an Offer in Compromise?

Most Offers in Compromise for businesses are only successful if the business is about to “go under” and the owners know they cannot make the business successful.  In that case, the IRS will usually settle for the discounted value of the remaining assets.  It is important to make an Offer if payroll taxes are involved because the trust fund penalty will be less against the owner.

 

 

However, if the business is a viable business and expectations are that it will continue indefinitely, the IRS is not usually willing to accept less than what is owed because they anticipate that the entire amount owed can be collected over time from current profits.  Therefore, the only possible Offer In Compromise for a successful business is an “in business” Offer.

This is one where the entire amount of the tax will be paid over time but a compromise is accepted on the interest and penalties owed.  Also, occasionally the statute for collecting the tax will run out before all of the tax is collected.  This can be a considerable savings for the company.  An important requirement is that the business must remain current on all ongoing taxes owed and these usually must be paid directly to the revenue officer assigned to the case.