IRS Warns of Tax Debt Offer In Compromise Scams

Posted by Jeffrey Siegel on November 19, 2021

The Internal Revenue Service posted a series of videos to explain how taxpayers can steer clear of scammers who claim to be able to help them with their tax debts while charging exorbitant fees and making outrageous claims.  We have all seen advertisements on TV and elsewhere for these scammers.  They are usually not lawyers or qualified CPAs. 

Even with the OIC program, many taxpayers who owe back taxes still face hardship in paying the negotiated amount, and the IRS isn’t always open to compromise or it may keep part of the tax refund to which taxpayers would otherwise be entitled. Earlier this week, National Taxpayer Advocate Erin Collins announced the IRS would relax some of its restrictions and allow taxpayers who have received an OIC to receive Offset Bypass Refunds to enable them to pay for necessities, but only under certain conditions.

Still, an OIC can be a legitimate option if a taxpayer can’t pay their full tax liability or doing so would lead to financial hardship. The IRS said it considers a taxpayer’s unique set of facts and circumstances when making its determination. However, some tax debt settlement companies take advantage of the program by overpromising what they can deliver.

“We encourage eligible taxpayers in real financial distress to consider looking into an Offer in Compromise to resolve their tax issues,” said IRS Commissioner Chuck Rettig in a statement Wednesday. “People also need to use caution with the program. Some companies routinely overstate how they can help with this program and clear up people’s back taxes for pennies on the dollar. A quick visit to can provide important information to help people with this program.”  Using a tax lawyer who is experienced handling OICs and seeking other relief offered by the IRS is the best option.  This includes installment agreements, innocent spouse relief or uncollectible status.

The IRS sometimes warns taxpayers against hiring and paying needless fees to what it refers to as “Offer in Compromise mills” that distort the IRS program and mislead taxpayers who have no chance of meeting the IRS requirements for an OIC while charging high fees, sometimes in the thousands of dollars. OIC mills were listed among the last two annual IRS Dirty Dozen lists of tax scams to avoid. 

The vast majority of tax professionals are honest and don’t make false claims about getting taxpayers special deals that only they can get. Taxpayers should consult a trusted reputable local tax attorney when needed.

Need back tax help in Kansas City?  Bank account levied in Kansas City?  Paycheck garnished in Kansas City?  Lien on business or home in Kansas City? If you or a client need help fighting off the IRS, call Jeffrey R. Siegel, your Kansas City tax attorney.  We help with IRS liens, wage garnishments, levies, offers in compromise, innocent spouse relief, federal employment tax, Trust Fund Recovery Penalty and installment agreements.  Bring back some stability to your life, and call (913) 735-4829.