The IRS’s offer in compromise program allows taxpayers facing financial hardships to settle their outstanding tax liability for pennies on the dollar.
The amount the IRS will accept is dependent upon a stringent formula, but the variables are subject to massage. When working with the agency to get a compromise approved, there are things about your story that the IRS should know in order to move it in the direction of acceptance.
The IRS will always consider the statute of limitations when evaluating an offer since it has 10 years to collect an outstanding tax debt. If you are between jobs and have no means to pay your tax bill but there’s eight years left before the statute runs out, the IRS will likely want to deem you ‘currently not collectable’ for a year rather than accept a reduced amount. This is especially true if you are young and healthy with good prospects