CTRS CTRS Offer in Compromise

Question 1

What are the three grounds upon which an Offer in Compromise (OIC) may be submitted?

Accepted Answer

Doubt as to Liability, Doubt as to Collectibility, and Effective Tax Administration

Answer

Financial Hardship, Penalty Waiver, and Statute Expiration

Answer

Audit Reconsideration, Appeals, and Tax Court

Answer

Innocent Spouse, Injured Spouse, and Separation of Liability

Question 2

What is Reasonable Collection Potential (RCP) and why is it central to the OIC process?

Accepted Answer

RCP is the IRS's estimate of the maximum amount it could collect from the taxpayer, and an OIC must generally equal or exceed this amount

Answer

RCP is the minimum penalty amount the IRS will assess on delinquent accounts

Answer

RCP is the taxpayer's net income over the remaining CSED period

Answer

RCP is the fair market value of the taxpayer's real property only

Question 3

What is the standard formula for calculating the offer amount under the Lump Sum Cash payment option?

Accepted Answer

Net equity in assets + (monthly disposable income × 12)

Answer

Net equity in assets + (monthly disposable income × 24)

Answer

Gross assets + total annual income

Answer

Total tax liability × 20%

Question 4

What is the non-refundable application fee for submitting an Offer in Compromise as of recent IRS guidance?

Accepted Answer

$205

Answer

$150

Answer

$300

Answer

$500

Question 5

What is the Low Income Certification and how does it affect OIC submission requirements?

Accepted Answer

It exempts qualifying low-income taxpayers from both the application fee and the required initial payment

Answer

It reduces the offer amount by 50% automatically

Answer

It requires the IRS to accept any offer from a low-income taxpayer

Answer

It waives all accrued interest on the tax liability

Question 6

How long does the IRS generally have to accept or reject an OIC before it is deemed accepted by default?

Accepted Answer

24 months from the date the IRS received the offer

Answer

12 months from submission

Answer

6 months from the date of the first IRS acknowledgment letter

Answer

36 months from assessment