Taxpayers who owe more taxes than they can pay may seek an Offer in Compromise (OIC) from the IRS to settle the debt for less. If the IRS finds that a taxpayer is able to pay in full, the OIC will likely be rejected. In one case, a warehouse worker who was estranged from his wife claimed to support four children (including a “developmentally challenged” child). The IRS found he was actually only supporting one child, and his monthly income and assets were deemed to be sufficient to cover expenses for himself and one child without hardship. The OIC was rejected but the IRS did place his account on “currently not collectible” status until his financial situation improves. (TC Memo 2022-66)
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