Offer in Compromise: Offer in Compromise
Offer in Compromise: Offer in Compromise is a critical concept in EA Exam Part 3, Representation Before IRS. This topic covers essential tax principles that frequently appear on the exam. Understanding offer in compromise is crucial for passing Part 3.
Quick answer
An Offer in Compromise (OIC) settles a tax debt for less than the full amount. Part 3 tests the three grounds (doubt as to collectibility, doubt as to liability, and effective tax administration) and how reasonable collection potential is computed.
Offer in Compromise is tested on EA Exam Part 3 (Representation Before IRS). Primary IRS reference: IRC §7122.
About this EA exam topic
An Offer in Compromise (OIC) settles a tax debt for less than the full amount. Part 3 tests the three grounds (doubt as to collectibility, doubt as to liability, and effective tax administration) and how reasonable collection potential is computed.
Expect questions on the application (Form 656), required payments, and when an OIC is appropriate.
What you'll be tested on
- The three OIC grounds
- Reasonable collection potential (RCP)
- Form 656 application and required payments
- Effect of an OIC on collection and compliance terms
How to prepare
- Memorize the three OIC grounds.
- Understand RCP drives the offer amount in collectibility cases.
- Know the post-acceptance compliance requirements.
Practice questions for Offer in Compromise
What this topic covers
Offer in Compromise appears in Part 3: Representation, Practices & Procedures within the Representation Before IRS domain. VantageEA practice questions focus on how offer in compromise rules are applied in realistic EA exam fact patterns.
What candidates practice
Candidates practice identifying tested facts, choosing the best multiple-choice answer, and reviewing explanations tied to IRC §7122, IRS Form 656. This topic supports timed 100-question PSI-style mock tests and shorter topic review sessions.
Related practice-question themes include oic, offer-in-compromise, form-656, rcf.
Topic overview
Frequently asked questions
What is an Offer in Compromise?
An agreement to settle a tax debt for less than owed, based on doubt as to collectibility, doubt as to liability, or effective tax administration.
Which part?
Part 3 (Representation).
Reference?
IRS Form 656 booklet.
Continue studying
More Representation Before IRS topics from Part 3
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Currently Not Collectible: Currently Not Collectible Status
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Federal Tax Liens: Federal Tax Liens
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Identity Theft: Identity Theft Procedures
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Innocent Spouse: Innocent Spouse Relief
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