Offer in Compromise (OIC) Payment Options

Offer In Compromise Payment Option 1

Lump Sum Cash Offer

A lump sum cash Offer in Compromise requires that the amount you offer has to be paid within five months in five or fewer installments. The payments are to start upon written notice of acceptance. If your IRS offer is accepted, you will receive an acceptance letter. The date on the letter is the date the five-month period for payments will start.

With a Lump sum cash offer 20% of the offer amount must be paid when the offer is submitted unless you qualify for the low-income exception previously mentioned. For a lump sum cash offer use a 48-month factor to determine the future income component of the computation if the offered amount would be paid in five months or less. If the offered amount will be paid longer than six months but less than 24 months use a 60 month factor. This will make more sense once we get into the computation.

Offer in Compromise Payment Option 2

Short Term Periodic Payment Offer

For this payment option the first payment must be made when the OIC (unless you qualify for the low income exception), and full paid within 24 months from the date the IRS received your offer. Form 656-PPV is used to make the payments. If you fail to make the payments on the offered amount, your offer will be considered withdrawn and any payments made will be applied to the total balance owing. A 60 month factor is used on short term periodic payment offers.

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