Taxpayers who owe more taxes than they can pay may seek an Offer in Compromise (OIC) with the IRS to settle their debt for less than the amount owed. In one case, the IRS rejected the OIC request of a married couple who offered to pay $45,966 to settle their joint tax debt of $437,369. The taxpayers claimed their financial condition rendered them unable to pay the amount owed. But an analysis by an IRS settlement officer (SO) uncovered income and assets sufficient to “fully pay their tax liabilities.” This included a home that the IRS appraised as being worth more than the couple claimed. Based on the SO’s analysis, the IRS rejected their OIC and the U.S. Tax Court agreed. (TC Memo 2023-69)
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