The Internal Revenue Service issued final regulations to increase the Offer in Compromise application fee to $205, while offering another way to waive the fee for low-income taxpayers based on their adjusted gross income.
The IRS typically considers the taxpayer’s overall financial circumstances when weighing an OIC, to resolve the amount due and lessen the taxpayer’s economic hardship. Applicants who meet the definition of a “low-income taxpayer” can receive a waiver of their OIC application fee.
A new provision in the Taxpayer First Act that Congress passed last year includes a new way for low-income taxpayers to qualify for a waiver of the OIC application fee. Typically, the IRS determines if taxpayers fall at or below 250 percent of the poverty level by taking into account their household’s size and gross monthly income. The Taxpayer First Act offers another standard the IRS can use in figuring the calculation, letting the IRS now also take into account a taxpayer’s adjusted gross income from the most recent tax return to decide whether it’s at or below 250 percent of the poverty level.
The IRS said, however, that taxpayers who have an outstanding tax debt should still respond to IRS notices in a timely manner and shouldn’t ignore the correspondence they receive from the IRS. Taxpayers with an outstanding tax debt should contact the IRS either at the phone number given in the notice, online or by visiting a local Taxpayer Assistance Center. There’s a list of local TACs available at IRS.gov. Taxpayers can also get help from the Taxpayer Advocate Service. Contact information for TAS is available online, including a listing of local TAS offices.
The IRS has long offered alternative dispute resolution, but says use has declined in recent years, and it hopes to make it more attractive and accessible.
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