Self-employed individuals should be aware of the changes to OIC low-income application fees

Effective July 2, 2019, the Taxpayer First Act added an extra method the IRS must use in determining the low-income certification threshold necessary to waive the application fee for an Offer in Compromise (OIC).

Taxpayers can apply to be considered for an OIC if they can’t pay their full tax liabilities, or if doing so would create a financial hardship. Offers currently require a $186 application fee to cover the cost of processing.

The IRS already waives the application fee for certified low-income taxpayers. However, the new method for determining eligibility for the waiver now uses the adjusted gross income (AGI) from the taxpayer’s most recent tax return.

Taxpayers who do not qualify based on their AGI may still qualify as low-income if their household’s gross monthly income for 12 months falls at or below 250% of the poverty guidelines listed in Form 656 (PDF).

Visit the Offer in Compromise page on IRS.gov for more information.