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

An OIC may be submitted on three grounds: Doubt as to Liability (DATL), Doubt as to Collectibility (DATC), or Effective Tax Administration (ETA).

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 represents what the IRS believes it can collect through all available means, and a successful DATC offer must generally meet or exceed the taxpayer's RCP.

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

For a lump sum cash offer (paid within 5 months), the offer amount equals net equity in assets plus monthly disposable income multiplied by 12.

Question 4

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

Accepted Answer

$205

Answer

The IRS charges a $205 non-refundable application fee for submitting an OIC, though this fee may be waived for low-income taxpayers.

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

Low Income Certification allows taxpayers at or below 250% of the federal poverty level to submit an OIC without paying the $205 application fee or the required initial payment.

(CTRS) Certified Tax Resolution Specialist Practice Test

(CTRS) Certified Tax Resolution Specialist Practice Test

CTRS CTRS Offer in Compromise