The program people have heard of, and the one most often misunderstood. Here is how an offer in compromise really works.
An offer in compromise (OIC) lets you settle your IRS tax debt for less than the full amount when paying in full would create hardship or the IRS could not realistically collect it.
It is real, but it is not for everyone. The IRS accepts an offer only when it reflects your genuine ability to pay, calculated from your income, expenses, and assets. A well-prepared offer has a far better chance than a hopeful number.
An offer in compromise is a formal proposal to the IRS to settle a tax debt for less than what is owed. The IRS accepts it when the amount offered is at least what it believes it could collect from you over time, a figure called your reasonable collection potential.
That number is built from your assets plus your future income after allowable living expenses. In other words, an OIC is not about negotiation or hardship stories; it is about presenting an accurate financial picture that shows the settlement is the most the IRS can realistically expect.
Eligibility is financial, not emotional. In general, you are a candidate when:
Be wary of firms that promise 'pennies on the dollar' to everyone. Not everyone qualifies, and a rejected offer costs time and money. We tell you honestly whether an OIC is realistic before you apply, and recommend the right program if it is not.
An offer has a few moving parts, all paid to the IRS:
If the IRS does not decide within 24 months, the offer is deemed accepted, one reason a complete, well-documented submission matters. Our own fee is quoted as a flat amount in writing after your free consultation.
A free, confidential review of your options. No obligation.
The same three-stage approach, applied to your case.
Before anything is filed, we determine whether an offer is realistic for you, so you do not spend time and money on a long shot.
We prepare the financial disclosures and calculate the offer the way the IRS evaluates it, to give it the best chance of acceptance.
We handle the back-and-forth with the IRS, respond to requests, and pursue the offer through to acceptance.
The IRS accepts roughly a third of the offers submitted, but that figure is misleading. Offers built by professionals on genuinely eligible cases are accepted at much higher rates, while do-it-yourself offers on ineligible cases drag the average down. Eligibility and preparation are everything.
There is no fixed percentage. The offer must reflect your reasonable collection potential, your assets plus your future ability to pay. For some that is a small fraction of the debt; for others an OIC is not the right tool. We calculate it before you apply.
Typically six to twelve months from submission to a decision. If the IRS has not decided within 24 months, the offer is automatically accepted. We keep the case moving and respond quickly to every IRS request.
No. It is available to taxpayers whose finances meet the criteria. If an OIC is not realistic for you, we will say so and recommend the program that is, such as an installment agreement or CNC status.
Filing an offer generally suspends active collection while it is evaluated, and the collection statute is paused during that time. This is one of the protections a pending offer provides.
Yes. The California FTB and other agencies have their own settlement programs with different rules. We prepare state offers and coordinate them with a federal OIC. See state tax resolution.
A free, confidential consultation about your federal or state tax matter. No obligation, no pressure.
