The Internal Revenue Service cautioned taxpayers to steer clear of promoters who claim their services are needed to handle unpaid debts, saying such businesses often charge excessive fees and often produce no results.
Like the so-called ERC "mills" that promote claims for the Employee Retention Credit, they use aggressive marketing, making false claims of guaranteed settlements for "pennies-on-the-dollar," or saying there's a limited window of time to resolve tax debts through the IRS
"Taxpayers should be cautious of aggressive marketing that can mislead them," said IRS Commissioner Danny Werfel in a statement Thursday. "Many OIC mills charge steep fees, give false assurances and can take advantage of taxpayers with empty promises that their tax debt will disappear. The result is often good money paid for bad results."
An Offer in Compromise legitimately allows qualifying taxpayers to work with the IRS to settle a tax debt for less than the full amount owed. It's a possible option for those who are unable to pay their full tax liability, or if doing so creates a financial hardship. In determining eligibility, the IRS considers the taxpayer's unique situation, income and equity in assets. The OIC agreement occurs directly between the taxpayer and the IRS.
The IRS acknowledged that some companies do offer legitimate services to help taxpayers file an OIC request. But some companies running OIC mills will heavily advertise their dubious promises to settle taxpayer debt at steep discounts. They usually charge excessive fees for a service taxpayers could have obtained themselves directly from the IRS.
The OIC promoters are not a new phenomenon. OIC mills make a perennial appearance on the IRS's annual
The IRS has created a new
