IRS Announces Application
Fee for Offers in Compromise
Headliner
Volume 51
August 21, 2003
Beginning November 1,
2003, the Internal
Revenue Service will
charge a $150
application fee for the
processing of offers in
compromise. The IRS
expects that this fee
will help offset the
cost of providing this
service, as well as
reduce frivolous claims.
For more information,
please visit our
Offer In Compromise
web site.
IRS Announces Application Fee for Offers in
Compromise
IR-2003-99, August 15,
2003
WASHINGTON — Beginning November 1,
2003, the Internal Revenue Service will
charge a $150 application fee for the
processing of offers in compromise. The
IRS expects that this fee will help
offset the cost of providing this
service, as well as reduce frivolous
claims.
The law authorizes federal agencies
to charge fees to defray the costs of
providing certain services. Guidelines
encourage such fees for benefits beyond
those provided to the general public.
The IRS anticipates the fee also will
reduce the number of offers that are
filed inappropriately — for example,
solely to delay collection — enabling
the agency to redirect resources to the
processing of acceptable offers.
“The application fee will provide
funding to recover some of the costs
associated with the offer in compromise
program and reduce the number of
inappropriate filings,” said Dale Hart,
Commissioner, Small
Business/Self-Employed Division.
An offer in compromise (OIC) is an
agreement between a taxpayer and the IRS
that resolves the taxpayer's tax
liability. Under certain circumstances,
the IRS has the authority to settle
federal tax liabilities by accepting
less than full payment. To submit an
OIC, a taxpayer must use the May 2001
version of the Form 656 “Offer in
Compromise” package.
All taxpayers who file an OIC will
have to pay the application fee with
their submission unless the offer is
based solely on doubt as to liability,
or the taxpayer’s total monthly income
falls at or below income levels based on
the Department of Health and Human
Services poverty guidelines. Taxpayers
who claim the poverty guideline
exception must certify their eligibility
using Form 656-A, “Offer in Compromise
Application Fee Instructions and
Certification.”
Form 656-A, which will not be
accepted by the IRS before November 1,
will be available soon on IRS.gov.
