How many types of OIC exists?
There are three grounds on which the IRS accepts an OIC. This is based on policy statement P-5-100.
Doubt as to Collectability: The goal of this Offer is to achieve the best possible settlement for the Federal Government. Also, they want to settle in the earliest possible time with the least cost to the government. They set the rules.
Doubt as to Liability: The goal of this Offer is to make sure the liability is correct. There are many times, that because of various legal issues, the assessment that was made by Internal Revenue Service itself was incorrect. This Offer allows the taxpayer a chance to have the IRS reexamine the case to make sure the assessment is, in fact, correct.
Effective Tax Administration: The goal of this Offer is based on a case by case basis. Due to extraordinary circumstances, it is best for the government to settle this case. These cases usually involve sickness or other life threatening situations. They are rare, but possible when the situation exist.
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