Taxpayers who owe more taxes than they can pay may seek an Offer in Compromise with the IRS to settle the debt for less than the amount owed. In one case, a married couple offered to settle their $33,000 tax bill for $1,629. The couple argued that the IRS should accept the offer because they were “both near retirement age and burdened with significant unpaid debt and loss of their jobs during the pandemic.” The IRS’s settlement officer (SO) rejected the offer because she concluded the taxpayers had enough income and home equity to pay the tax bill in full. The U.S. Tax Court determined that the SO abused her discretion and remanded the case to the IRS Appeals Office. (TC Memo 2023-59)
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