IRS Warns Taxpayers About Misleading “Offer in Compromise” Mills
In a recent announcement (IR-2024-243, Sept. 19, 2024), the IRS has issued a strong warning to taxpayers about predatory companies, often referred to as “OIC mills,” which exploit individuals seeking relief from their tax debts. These unscrupulous firms often charge excessive fees with empty promises of settling tax debts for “pennies on the dollar,” leaving taxpayers worse off than before.
The Reality of the Offer in Compromise (OIC) Program
The Offer in Compromise (OIC) is a legitimate IRS program designed to assist taxpayers who cannot afford to pay their full tax liability. Under this program, qualifying individuals can settle their tax debt for less than the amount owed, based on their financial circumstances. Factors such as income, living expenses, and equity in assets are considered in determining eligibility.
However, the IRS warns that these “mills” often make misleading claims, aggressively marketing guaranteed settlements and creating a false sense of urgency, when in reality, not all taxpayers qualify for OIC. “Taxpayers should be cautious of aggressive marketing that can mislead them,” said IRS Commissioner Danny Werfel, noting that many OIC mills charge high fees with false promises, leaving taxpayers frustrated and still in debt.
How to Avoid Falling for OIC Mills
The IRS encourages taxpayers to be aware of OIC mills that overcharge for services that can be completed without third-party assistance. Taxpayers can apply directly for an OIC through the IRS website, which offers tools like the Offer in Compromise Pre-Qualifier to check eligibility. The process is straightforward, and IRS.gov has helpful resources and guidance for those seeking to understand their options.
Additional Payment Options
For those who do not qualify for an OIC, other payment plans are available, such as short-term and long-term installment agreements. These plans allow taxpayers to settle their debts over time, with clear terms and immediate approval online.
Protect Yourself from Scams
To help taxpayers avoid becoming victims of these schemes, the IRS has launched educational resources, including a video playlist on OIC scam awareness. The IRS also urges individuals to report any abusive tax schemes or fraudulent tax preparers using Form 14242.
The takeaway: if you’re dealing with tax debt, do your research, and don’t be lured by “too good to be true” offers. Trusted IRS resources are available, and many solutions are just a click away on IRS.gov.
