What Happens to an Offer in Compromise If You Get Divorced?

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Financial concerns play a huge role in today’s marriage difficulties and ensuing divorces. In many cases, the trouble stems from issues with the IRS. Some couples will have made the effort to secure an offer in compromise, only to have it all thrown into question based on their decision to split up.

Offers in compromise can make divorces frustrating, but the process of dissolving your marriage need not prevent you from getting the tax relief you need. Keep reading to learn more.

Which Divorce-Related Changes Can Affect Offers in Compromise?

Before you can understand how to minimize the impact of a divorce on your OIC, it’s important to realize where, exactly, marriage dissolution could cause trouble with the IRS. Top areas of consideration include:

  • Tax filing status and the need for multiple OIC applications. Your marital status represents one of the first and most important pieces of information you’ll share on IRS Form 433-A (OIC). The document instructs applicants, “If you are married but living separately from your spouse then you each must submit a Form 433-A (OIC).”
  • Changes to your standard of living. If you resided together when you initially applied for an OIC, your income, assets, and general living expenses have likely changed quite a bit since you decided to file for divorce. These details determine whether the IRS is willing to provide an offer, so they must be updated accordingly. Similarly, divorce-related financial changes could lead to OIC revisions, which, in turn, could prompt increases in tax liability.

Building Your Offer in Compromise Into Your Divorce

If you have an existing OIC, it’s crucial that you factor it into your general financial situation as you navigate the divorce process. Ideally, you will incorporate anticipated OIC modifications into your settlement to ensure that tax burdens are equitably distributed.

At the Highland Tax Group, we can provide insight into a variety of concerns that may impact your tax situation. Whether you’re planning on filing for divorce or pursuing other significant life changes, you can count on us for compassionate support. Reach out today to learn more.