Settle Your Tax Debt for Pennies on the Dollar
Can't afford to pay your full tax debt? An Offer in Compromise lets you settle with the IRS for less than you owe. Our tax attorneys can help you qualify and negotiate the best settlement. The IRS rejects 60% of OIC applications - don't risk rejection, get expert help now.
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Settle Your Tax Debt for Less with an Offer in Compromise
Can't afford to pay your full tax debt? An Offer in Compromise lets you settle with the IRS for less than you owe. Our tax attorneys can help you qualify and negotiate the best settlement.
Get Free ConsultationWhat Is an Offer in Compromise?
An Offer in Compromise (OIC) is an agreement between you and the IRS to settle your tax debt for less than the full amount you owe. It's one of the most powerful tools for resolving overwhelming tax debt, but it's also one of the most difficult to obtain. The IRS only accepts offers when they believe it's the most they can reasonably collect from you.
Real Example: Settle $100,000 for $15,000
If you owe $100,000 in back taxes but can only afford to pay $15,000 based on your income, assets, and expenses, the IRS may accept an Offer in Compromise for $15,000 and forgive the remaining $85,000.
However, the IRS rejects most OIC applications. Having an experienced tax attorney dramatically increases your chances of acceptance.
Do You Qualify for an Offer in Compromise?
The IRS considers three main factors when evaluating an Offer in Compromise:
1. Doubt as to Collectibility
This is the most common basis for an OIC. You must prove that you cannot pay the full tax debt based on your current income, assets, and reasonable living expenses. The IRS calculates your "reasonable collection potential" (RCP) to determine the maximum they can collect from you.
2. Doubt as to Liability
If you have legitimate doubt about whether you actually owe the tax debt, you may qualify for an OIC based on doubt as to liability. This is less common and requires proving that the IRS made an error in calculating your tax liability.
3. Effective Tax Administration
In rare cases, the IRS may accept an Offer in Compromise based on exceptional circumstances where collecting the full debt would create economic hardship or be unfair. This requires proving that paying the debt would prevent you from meeting basic living expenses.
How the Offer in Compromise Process Works
Pre-Qualification Analysis
Our tax attorneys analyze your financial situation to determine if you qualify for an OIC. We calculate your reasonable collection potential and assess your chances of acceptance before submitting an application.
Prepare and Submit Application
We prepare Form 656 (Offer in Compromise) and Form 433-A or 433-B (Collection Information Statement) with detailed financial documentation. We also submit the required application fee and initial payment.
IRS Review and Investigation
The IRS reviews your application and may request additional documentation. They verify your income, assets, and expenses. This process can take 6-12 months or longer.
Negotiation and Acceptance
If the IRS accepts your offer, you must comply with all payment terms and stay current on all tax filings for 5 years. If they reject it, we can appeal the decision or explore alternative solutions.
Why You Need a Tax Attorney for an OIC
The IRS rejects the majority of Offer in Compromise applications. Common reasons include incomplete documentation, calculation errors, and failure to prove financial hardship. Our tax attorneys have extensive experience preparing successful OIC applications:
Accurate Financial Analysis
We calculate your reasonable collection potential using IRS formulas and guidelines, ensuring your offer amount is neither too high nor too low.
Complete Documentation
We gather and organize all required financial documentation, including bank statements, pay stubs, asset valuations, and expense records.
Strategic Presentation
We present your financial situation in the most favorable light, highlighting factors that support your case while addressing potential IRS objections.
Negotiation Expertise
If the IRS proposes a higher settlement amount, we negotiate on your behalf to reach the best possible agreement.
Appeals Representation
If your offer is rejected, we can appeal the decision and present additional evidence to support your case.
Alternative Solutions
If you don't qualify for an OIC, we explore other options like installment agreements, currently not collectible status, or penalty abatement.
Get a Fresh Start with an Offer in Compromise
An Offer in Compromise can give you a fresh start by settling your tax debt for a fraction of what you owe. However, the application process is complex and the IRS rejects most offers. Our tax attorneys have helped hundreds of clients successfully negotiate OICs and achieve financial freedom. Contact us today for a free consultation to see if you qualify.
Get Your Free Consultation NowCommon Mistakes That Get OIC Applications Rejected
✗ Incomplete or Inaccurate Financial Information
Missing documentation, calculation errors, or inconsistent information will result in rejection. The IRS requires complete and accurate financial disclosure.
✗ Offering Too Little
If your offer is significantly lower than your reasonable collection potential, the IRS will reject it. You must offer at least what the IRS believes they can collect from you.
✗ Not Being Current on Tax Filings
You must have filed all required tax returns before the IRS will consider your OIC application. If you're missing returns, file them first.
✗ Having the Ability to Pay
If the IRS determines you can pay the full debt through a payment plan or by liquidating assets, they will reject your offer. An OIC is only for taxpayers who truly cannot pay.
Frequently Asked Questions About Offer in Compromise
How much does it cost to apply for an Offer in Compromise?
The IRS charges a $205 application fee (waived for low-income taxpayers). You must also submit an initial payment with your application—either 20% of the total offer amount (for lump sum offers) or the first monthly payment (for periodic payment offers). These payments are non-refundable if your offer is rejected.
How long does the OIC process take?
The IRS typically takes 6-12 months to review an Offer in Compromise application, but it can take longer if they request additional documentation or if your case is complex. During this time, collection activities are generally suspended, and the statute of limitations on collection is extended.
What happens if my offer is rejected?
If your offer is rejected, you have the right to appeal the decision within 30 days. Our tax attorneys can represent you in the appeals process and present additional evidence to support your case. If the appeal is unsuccessful, we can explore alternative solutions like installment agreements or currently not collectible status.
Can I apply for an OIC if I'm in bankruptcy?
No, you cannot apply for an Offer in Compromise while you're in an open bankruptcy case. You must wait until your bankruptcy is discharged or dismissed. However, bankruptcy may be a better option for some taxpayers, depending on the type of tax debt and your financial situation. Our tax attorneys can help you determine the best approach.
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