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Offer In Compromise: Legally Defensible Positions

May 5, 2016 | IRS

Offer In Compromise: Legally Defensible PositionsDiscourage litigation. Persuade your neighbors to compromise whenever you can. — Abraham Lincoln

Last week we discussed ways to negotiate with the Internal Revenue Service (IRS) during Notice Season. One of those ways is to enter into an Offer In Compromise (OIC), a method used to negotiate with the feds to pay a lesser amount than what you actually owe.

You can fight the claims but you must meet certain requirements to even be considered or heard. Your lawyer or accountant should already be in the know and should advise whether or not to proceed.

Here are three defensible positions for OIC.

  • Doubt as to Liability. Maybe you weren’t at fault. Can you prove it? If you’re confident that the reason for you don’t have to pay up is because you should not be held responsible, then your lawyer should be preparing a statement. Some examples of deniability include being the spouse or relative of someone who’s on notice; or maybe mistaken identity. If you’ve got a common last name, like Smith or Jackson, you might have already been put through the wringer.
  • Effective Tax Administration Offer. This is the “hail mary” approach. The IRS considers whether or not it is practical, probable and in keeping with public opinion to continue to collect large amounts of tax from someone who is in very poor health, or elderly and not able to work. A 98-year-old in terrible health could qualify for this defensible position. This is a much tougher sell in some cases. This takes the position of: “I can pay you in full, but it would put me out on the street, so there’s got to be another way to do it.”
  • Doubt as to Collectibility. This is the “I’m completely broke” approach. You’ll find step-by-step instructions and all the forms for submitting an offer in the Offer in Compromise Booklet, Form 656-B.

Brinen & Associates has had success with the service with each of these positions. Sometimes the debt was substantially lowered and other times the wheels of justice move very slowly. We’d only go to argue if we knew we had all the facts in our arsenal.

Workable, But Not Necessarily Defensible Positions

  • If you’re behind bars — regardless of the reason — there may be some collection issues. You may need a criminal lawyer in addition to your tax one. Have them communicate because you have to start sending some money to the creditor as well as to a bail bondsman.
  • This is the flip-side of the effective tax administration coin. If you’re in generally fine health but maybe the stress of things manifested itself inside you and sent you to the hospital, then you might be able to get some leniency from the collecting agent. The flu, chickenpox or a broken bone ain’t gonna save you, though.
  • If you’ve been hit by a Sandy or Katrina, it oftentimes levels the playing fields in the eyes of the feds. It’s not a guarantee, though. It’ll delay the process and they will sympathize but they won’t forget that you owe them.

If you have a defensible position or you think you need one, come see us and we’ll do our best to make a judge or collecting agent sympathize.


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I formerly worked as a satellite employee from my home state of New Jersey. I ended my employment with my former employer in 2016. In 2018, I was sued by my former employer for $1.1 million in Illinois State Court. I was referred to Brinen & Associates, LLC by a friend who is a client of the firm. Brinen & Associates, LLC came highly recommended. I contacted Joshua Brinen and then had a consultation at his office with his colleague Mark White. Together, Messrs. Brinen and White explained my options...

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