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Offer in Compromise

IRS Offer in Compromise - Settle for Less

An Offer in Compromise allows you to settle your tax debt for significantly less than you owe. Approval is difficult but can save thousands.

OIC requires proof of financial hardship. Most people qualify if they act with professional help.

What is an Offer in Compromise?

An Offer in Compromise (OIC) is a formal settlement with the IRS allowing you to pay less than the full amount you owe. The IRS accepts the offer if the amount you propose represents the most they could collect from you.

  • Settle for less: Pay a percentage of what you owe, sometimes 10-50% of the total debt
  • Difficult to qualify: OIC requires you prove you cannot ever pay the debt in full
  • Stops collection: Filing an OIC application pauses levy and garnishment during review
  • Lengthy process: OIC review typically takes 6-24 months

Who Qualifies for OIC?

The IRS approves OICs only when you meet strict criteria:

  • You cannot pay the debt in full even with a payment plan
  • You have limited income and high expenses
  • You don't have significant assets (home, investments, etc.)
  • Your offer represents the maximum the IRS can collect from you
  • You don't have fraudulent or criminal tax issues

OIC is rarely approved unless you're in severe financial distress with almost no ability to pay. Payment plans are far more commonly approved.

How to File an OIC

  1. Gather financial documentation: Last 2 years of tax returns, pay stubs, bank statements, asset lists, monthly expense breakdown
  2. Calculate reasonable amount: Determine what you can afford as settlement (consider your income, expenses, assets)
  3. Complete IRS Form 656: Official OIC application form with financial details and settlement amount
  4. Submit with payment: Most OICs require 20% of proposed amount as good faith payment when filed
  5. Wait for review: IRS investigates your finances and decides whether to accept or reject offer

Explore OIC Option

  1. 1

    Assess Your Situation

    Are you in severe hardship with very limited income and no assets? OIC may be worth exploring.

  2. 2

    Consult Tax Professional

    OIC is complex. A CPA or tax attorney can evaluate if you qualify and maximize your chances of approval.

  3. 3

    Consider Payment Plan First

    Payment plans are approved 90%+ of the time. OIC is rejected 80%+ of the time. Try payment plan first.

  4. 4

    Request Hold While Exploring

    Request collection hold to stop levy/garnishment while you evaluate OIC eligibility with professional.

Need Immediate Help?

Our tax professionals can contact the IRS today and request a hold on collections while we review your situation.

Request a Hold Now

No obligation. We will review your case and contact you.

Call (310) 598-3759

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