An offer in compromise (OIC) is one of the best ways to resolve an unpaid tax bill. However, it comes with its own share of downsides, including a complex application process. One way to mitigate these risks is to hire an OIC tax attorney, but many would-be applicants wonder about the associated cost. The short answer is that it depends, although you should expect the attorney fees to be at least a few thousand dollars.

The purpose of this guide is to help you decide if paying for an OIC lawyer makes financial sense–and if it does, what you should look for when trying to choose the right offer in compromise attorney for your tax matter. If you need help making this decision or you have already decided that a tax lawyer is right for you, contact Seattle Legal Services, PLLC online or by calling 425-428-5262.

Key Takeaways

  • A good OIC lawyer starts with analyzing your tax history and finances, followed by confirming OIC eligibility and walking you through the OIC process.
  • A lawyer’s total fee depends on various factors, but you should expect to pay anywhere from $3,000 to $15,000.
  • Companies that guarantee results or quote you a fee before examining your tax history, large upfront fee charges without providing specifics, or make claims that are too good to be true may not be trustworthy for your tax needs.

What a Good Offer in Compromise Attorney Does

If you hire a lawyer to help you with your offer in compromise, there are several things you can expect them to do for you.

Analyze Your Financial Situation

This is one of the most important benefits that come with hiring a tax attorney. They begin by asking questions about your tax problem and examining various tax records, including your:

The goal here is for your lawyer to get a good understanding of what you’re dealing with and identify what tax relief option makes the most sense for you.

Confirm If an Offer in Compromise is Your Best Course of Action

This step is what often separates many OIC tax lawyers from many other “professionals” that offer OIC tax services. Not every taxpayer is eligible for an OIC, and even if they are, there might be other tax solutions that offer greater financial benefits.

The OIC application process can take a long time and costs more than a trivial amount of money. Your tax attorney decides if there’s a reasonable chance the IRS will accept your offer before starting the OIC paperwork and document gathering.

Assist With the Offer in Compromise Application and Negotiation

Assuming an OIC makes the most sense for you, your attorney will help you with preparing the necessary forms. The two most important are IRS Form 656, Offer in Compromise, and either IRS Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individual,s or IRS Form 433-B (OIC), Collection Information Statement for Businesses.

Besides helping complete these forms, your tax professional will help you identify and include relevant documents. OIC forms have a long list of supporting documents and records they require you to send in.

After reviewing your submission, the IRS may grant you an OIC, but only if you agree to a higher offer. Your attorney can negotiate with the IRS during this back-and-forth process by explaining why the IRS’s counteroffer isn’t reasonable and giving more information to support your original offer amount.

Provide Guidance In Case of an OIC Denial

If the IRS rejects your OIC, your attorney will explain the reasons for the rejection and whether it’s worth filing an appeal. If the IRS returns your OIC, then your attorney can help you fix the deficiencies and resubmit your offer if it makes sense to do so.

In some instances, it might not be worth resubmitting your OIC or appealing the rejection. In that case, your attorney can discuss other tax relief options, such as a Currently Not Collectible status or a Partial Payment Installment Agreement.

Typical Attorney Fees for an OIC

If you hire a tax lawyer to help you with the OIC application process, you should expect to pay anywhere from $3,000 to $15,000. This is a broad range because there are multiple variables that affect the amount of offer in compromise attorney fees:

  • The size of your tax debt: The bigger the tax debt, the more involved the OIC process is likely to be.
  • Whether you’re current with your tax return filing obligations, before submitting an OIC, you can’t have any unfiled tax returns.
  • Whether the OIC is for a personal or business tax debt: Business tax debts are typically more complex than personal tax debts.
  • Whether you’re also facing the possibility of civil or criminal tax penalties, the information you provide for your OIC might increase the likelihood of civil or criminal liability.
  • Your geographic location: The higher the cost of living where you reside, the more likely your tax attorney will charge more.
  • Your attorney’s level of OIC experience: The more OIC applications your attorney has successfully submitted to the IRS, the more they might charge for their services.
  • Scope of work: An attorney whom you hire to just examine your tax documents and help with the application process will charge a different amount than an attorney you hire to appeal an already rejected OIC.
  • The overall complexity of your tax situation: More complexity increases the chances of more documents that need to be examined and more follow-up requests for information and documents from the IRS.

Another thing to keep in mind is that a tax lawyer might charge a smaller upfront fee to examine your tax documents and financial details to decide what your best tax resolution pathway is. After this analysis, they can give you a price estimate for how much your attorney will charge for the OIC or other recommended relief options.

Red Flags When Choosing an OIC Tax Lawyer

For some, selecting the right OIC lawyer sometimes comes down to who charges the lowest price for their services. But before you go with the cheapest option, there are other factors to consider. Below are red flags that indicate you should stay away from a particular tax pro, no matter how little they charge.

Guaranteed Results

It’s very difficult to know for sure if the IRS will accept your offer, even after reviewing your tax information. A tax relief company that promises specific results from an OIC could be lying.

Too Good To Be True Promises

Many tax resolution firms will promise to resolve your tax debt for “pennies on the dollar” using an offer in compromise. While it’s possible to achieve these results, these drastic tax debt reductions aren’t the norm.

Another promise to look out for is quick or immediate results with an OIC. The entire OIC process from submission to acceptance can take many months, with much of that process outside the tax professional’s control.

OIC Fee Quote Without Financial Analysis

Before a tax company can tell you how much it’ll cost to help you with an offer in compromise, they need to know how much work is involved. And before they can know how much work your case requires, they need to review your tax history and finances.

Large Upfront Payments Without Specifics

Many tax resolution businesses ask for upfront payments. But these are usually modest in relation to the total cost of their services. Additionally, a good tax professional will explain the fee structure and how the timing of your fees coincides with progress made in your tax matter.

No Tax Professional Access

You should be suspicious of companies that claim to have a tax attorney, enrolled agent, or certified public accountant handling your case, but won’t let you communicate with them.

What To Expect From a Good Offer in Compromise Lawyer

There are several benefits that come with hiring a tax lawyer instead of a generic tax relief company. If you hire a tax lawyer to help you with your OIC, you can expect:

  • A careful and detailed investigation into your tax history and financial information, such as your income, debts, household makeup, and monthly expenses
  • Clear and prompt communication that’s protected by attorney-client privilege
  • Full transparency that explains not just the numbers, but the reasoning behind them
  • Creative tax strategies that are developed to account for your unique economic information

OIC Tax Attorney Representation From Seattle Legal Services, PLLC

Not all tax professionals are created equal, and when considering an offer in compromise, you want every advantage you can get. It’s true that the OIC process is largely a numbers game, but a skilled tax lawyer can help calculate the numbers that give you the best chance of convincing the IRS to accept your offer. To get started, schedule a free consultation with a tax attorney from Seattle Legal Services, PLLC. You can reach us with our online contact form or by calling 425-428-5262.

IRS OIC Tax Lawyer Fee FAQs

How do offer in compromise tax lawyers charge for their services?

The majority of OIC attorneys will charge either a flat fee or by the hour. If a flat fee billing arrangement is used, it should explain not just the total cost, but also identify the specific services you’re paying for.

How much does it cost to hire an attorney to apply for an OIC?

It depends on many variables, each of which can have a dramatic effect on how much you pay. An OIC lawyer fees typically range from $3,000 to $7,000. Fees exceeding $10,000 are also possible for particularly complex cases, or those involving litigation, such as appealing a rejected OIC to the Independent Office of Appeals or the U.S. Tax Court.

Is it worth hiring a tax lawyer for an offer in compromise?

This is an even more difficult question to answer because it can bring in non-monetary factors to consider. For example, is the peace of mind and increased chances of OIC acceptance that come with hiring an attorney worth it? Your answer to that question may be completely different from someone else’s, even with identical financial situations. All that being said, hiring a good tax attorney or enrolled agent with OIC experience probably provides a better chance of acceptance than if you were to handle things on your own.

Do I need to hire an attorney to apply for an offer in compromise?

You don’t have to, but unless you’re financially savvy and have a relatively straightforward tax matter, it’s recommended that you hire one. If your tax bill is too small to justify the services of a tax relief professional, then there may be other tax resolution options to consider, like penalty abatement or a payment plan.

Sources

– https://www.irs.gov/appeals/appeal-your-rejected-offer-in-compromise-oic