Offer in compromise: an honest read before you pay anyone

What an offer in compromise is

An offer in compromise (OIC) is an agreement with the IRS to resolve a tax debt for less than the full amount. The IRS accepts one when it concludes that is the most it can reasonably expect to collect, or, in narrower cases, when the debt is wrong or collecting it in full would create an economic hardship.

Why most of the advertising is misleading

The IRS decides on your ability to pay, not on how large the debt feels. It looks at your income, necessary living expenses, the equity in what you own, and how long it has to collect. If those numbers show you can pay the debt in full over time, the offer is rejected, and the fees you paid to apply are gone. The radio ads promising pennies on the dollar leave that part out.

What has to be true before you apply

• Every required tax return has been filed.
• Current-year estimated payments are being made, or you are withholding enough.
• If you have employees, your payroll tax deposits are current.
• You are not in an open bankruptcy.

If any of those are missing, we fix them first. An offer that is returned for a missing return costs time and money you did not need to spend.

How we work on one

1. We pull your IRS transcripts so we know exactly what the IRS says you owe, for which years.
2. We run the same calculation the IRS will using your income, expenses and assets, and tell you whether an offer is realistic.
3. If it is, we prepare and submit it and handle every question the IRS asks. If it is not, we show you the option that fits, usually a payment plan.

Applying involves an application fee and an initial payment unless you meet the IRS low-income guidelines. A decision typically takes many months, and collection is generally on hold while the offer is pending.

Results depend on your facts, and the IRS makes the final decision. We cannot promise an outcome. We can promise an honest answer about your chances first.

Related

• IRS payment plans
• Unfiled tax returns
• Levies and wage garnishments
• IRS tax liens
• Penalty relief
• Audit and appeals
• Payroll tax problems