Offer in Compromise
Settle your IRS tax debt for less than the full amount owed. Our enrolled agents prepare and negotiate Offers in Compromise with the IRS to help you resolve tax debt and achieve a fresh financial start.
What Is an Offer in Compromise?
An Offer in Compromise (OIC) is an IRS program that allows eligible taxpayers to settle their federal tax debt for less than the full amount they owe. The IRS accepts offers based on doubt as to collectibility, meaning your total assets and future income potential are less than the full tax debt.
Not everyone qualifies for an OIC. The IRS uses a strict financial formula to determine your reasonable collection potential (RCP). If your RCP is less than your total tax debt, you may be a candidate for settlement.
Do You Qualify for an Offer in Compromise?
These indicators may suggest you are a candidate for an OIC.
Limited Future Income
Your future earning potential is unlikely to allow full repayment of the tax debt within the collection statute.
Limited Assets
Your total assets (home equity, investments, vehicles) are insufficient to pay the full tax debt.
Significant Tax Debt
Your tax debt is substantial relative to your income and assets. OIC works best for larger debts.
No Non-Compliance Issues
You are fully compliant with all tax filings for the last 6 years and have no open bankruptcy.
Collection Statute Expiring
The IRS collection statute (10 years from assessment) is approaching, reducing their leverage.
Health or Hardship
Serious medical issues or other hardships that impair your ability to earn income and pay the debt.
Our OIC Process
From financial analysis to post-acceptance compliance, we handle every step.
Financial Analysis
We review your income, assets, expenses, and tax debt to determine whether you qualify for an OIC.
Application Preparation
We prepare Form 656 (Offer in Compromise) and Form 433-A/B with supporting financial documentation.
Submission & Payment
We submit the application with the required fee and initial payment, and manage all IRS correspondence.
IRS Negotiation
We respond to IRS inquiries, provide additional documentation, and negotiate the best possible settlement on your behalf.
Post-Acceptance Compliance
If accepted, we guide you through the 5-year compliance period to ensure your offer is not defaulted.
Related Services
Other IRS resolution services you may need.
IRS Tax Resolution
Comprehensive IRS tax resolution services for audits, back taxes, and collection issues.
Penalty Abatement
Remove or reduce IRS penalties through first-time abatement and reasonable cause arguments.
Installment Agreements
Set up manageable monthly payment plans with the IRS for your tax debt.
Offer in Compromise FAQ
What is an Offer in Compromise?
An Offer in Compromise (OIC) is an IRS program that allows eligible taxpayers to settle their tax debt for less than the full amount owed. The IRS considers your income, assets, expenses, and future earning potential when determining whether to accept an offer.
How do I qualify for an Offer in Compromise?
You may qualify if you cannot pay the full tax debt, paying the full amount would create financial hardship, or there is doubt as to the accuracy of the tax owed. The IRS evaluates your financial situation using Form 433-A (OIC) or Form 433-B (OIC) for businesses.
How much does an Offer in Compromise cost?
The application fee is $205, plus a required 20% down payment of the offer amount with the application (unless you qualify for the Low-Income Certification). Professional fees for OIC preparation vary based on complexity.
How long does the OIC process take?
The IRS typically takes 6 to 12 months to review an Offer in Compromise. During this time, the IRS generally suspends collection activities. If accepted, you must comply with all tax filing and payment requirements for the next 5 years.
What happens if the IRS rejects my Offer in Compromise?
If your OIC is rejected, you have 30 days to appeal the decision. You may also be able to withdraw your offer and request a refund of the application fee. We help clients prepare strong appeals.
Can I apply for an Offer in Compromise if I have unfiled returns?
No. You must be fully compliant with all tax filing requirements before the IRS will consider an Offer in Compromise. This includes filing all required tax returns for the previous 6 years.
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