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December 22, 2014


When OIC negotiations break down, is mediation possible?

An offer in compromise (OIC) is a useful option for many people in resolving tax debt. If the IRS accepts your offer, the OIC procedure allows you to settle your debt for less than the full amount you owed.

The OIC program keeps changing, however, and it is important to keep close tabs on what the rules are. In this post, we will take note of rules released by the IRS earlier this month regarding post-appeals mediation in OIC cases.

Mediation in OIC cases is not completely new. The IRS Office of Appeals has been testing it out in a pilot program for several years in selected cities. It will now be available nationally.

Working out an OIC requires negotiations with the IRS concerning how much you can reasonably be expected to pay. Sometimes those negotiations bog down at the stage where a taxpayer has already unsuccessfully contested the taxes with the IRS Office of Appeals.

Post-appeals mediation, however, allows for a chance to you to revisit negotiations for an OIC that did not initially yield a fruitful result. The hope is that with a little more give and take through mediation, you can work out an OIC with the IRS.

The mediator who is supposed to encourage you and the IRS to work out an agreement is not necessarily an independent third party. At no charge to you, the IRS will make available an officer from its Office of Appeals who has received training in mediation techniques. If you prefer, you could also enlist — at your own expense – a co-mediator who does not work for the IRS.

Neither you nor the IRS is required to mediate. But either party can request it – and under the program, the mediation is supposed to occur within 90 days of both sides’ agreement to participate.

Source: Accounting Today, “IRS Expands Post-Appeals Mediation for Offers in Compromise,” Michael Cohn, Dec. 12, 2014

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