OIC user fee.

Effective Nov. 1, 2003, final regulations (TD 9086) will require a $150 user fee for many offers-in-compromise (OIC). The fee recovers part of the cost of processing OIC requests and evaluating a taxpayer's ability to pay.

Taxpayers will normally pay the fee when submitting an OIC request. There will be no user fee imposed on OICs (1) based solely on doubt as to liability or (2) made by low-income taxpayers. The final regulations authorize the IRS to adjust the definition of "low-income taxpayer" and change the low-income standard if necessary.

If an OIC is accepted (1) to promote effective tax administration of (2) based on doubt as to collectibility, and if a determination that collecting more than the amount offered would create economic hardship, the fee will be applied to the offer (or refunded on request). In other circumstances, the lee payment will be taken into account in determining the acceptable amount of the offer; thus, taxpayers will pay no more in total than they would have paid without the fee.

User fees will not be refunded if an OIC is withdrawn, rejected of returned as nonprocessable after acceptance for processing. However, no additional fee will be charged if a taxpayer resubmits an offer that was rejected or returned in error by the IRS. The Service will work closely with taxpayers to perfect incomplete or inadequate offers before returning or rejecting them.