OIC is the last option available to a taxpayer after trying other options and not being able to make use of them. In order to file an offer in compromise a taxpayer is expected to fulfill some requirements. According to the new legislation, the taxpayer must submit a 20% of the total proposed amount up-front payment to be able to file an OIC. This is a non-refundable amount. In addition to this the OIC fee is $150.

The taxpayer should not be bankrupt; otherwise his application will not be accepted. IRS in return offers an amount to be paid by the taxpayer in five years, and if this condition is not met by the taxpayer then he will be regarded as a defaulter and a reinstatement of tax liability will be filed against him.

You have to keep in mind that it can take up to two years until your application is processed and accepted. You need to be patient in all this time. Do not do anything which might make matters worse between you and the IRS. Also remember that you have to make payments on your debt while your application is being processed.