An Offer in Compromise can resolve your tax debt for a fraction of the balance — but the IRS rejects the majority of offers that are filed without a realistic financial analysis. We tell you honestly whether you qualify before we file anything.
An Offer in Compromise (OIC) is a legal agreement between you and the IRS that closes out a tax debt for less than the full amount owed. It exists because the IRS would rather collect a realistic amount now than chase an unpayable balance for years. The catch is that the IRS only accepts an offer when the number you propose matches — or exceeds — what it calculates it could collect from you through its own formulas.
That calculation is called your Reasonable Collection Potential, and it's the single biggest factor in whether an offer gets accepted, countered, or rejected outright.
Before we file anything, we run your numbers against the same formula the IRS uses:
An Offer in Compromise (OIC) is an agreement that lets you settle your tax debt for less than the full amount you owe. The IRS will accept an offer when it concludes that the amount offered represents the most it can reasonably expect to collect from you, based on your income, expenses, assets, and future earning potential.
Qualification depends on your Reasonable Collection Potential (RCP) — essentially what the IRS believes it could collect from your assets and disposable income over time. You must also be current on this year's estimated payments or withholding, and you can't be in an open bankruptcy. We run the numbers honestly before we ever file, because submitting an offer that's destined to be rejected just wastes your time and the application fee.
The IRS looks at your net realizable equity in assets (home, vehicles, bank accounts, retirement accounts) plus your future income over either 12 or 24 months, depending on the payment option you choose. Allowable monthly expenses — based on IRS Collection Financial Standards, not your actual budget — reduce the income side of that calculation.
Typically 6 to 12 months, though complex cases can take longer. The IRS suspends collection activity (in most cases) while your offer is under review, which is one of the practical benefits of filing even before a final decision is reached.
You can appeal the rejection within 30 days through the IRS Independent Office of Appeals, which often results in a better outcome than the original determination. If an appeal isn't the right path, we pivot to other resolution options like an installment agreement or Currently Not Collectible status.
Yes — interest and certain penalties continue to accrue on the underlying balance until the offer is accepted and paid, or until the debt is otherwise resolved. We factor this into the strategy so there are no surprises.
A free case review tells you, in plain terms, whether an Offer in Compromise is realistic for your situation — and what the alternative looks like if it isn't.
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