Offer in Compromise: The Truth About Settling with the IRS
You've seen the ads. 'Settle your tax debt for pennies on the dollar!' Here's what those ads don't tell you: the IRS rejects most Offers in Compromise. The ones that get accepted? They're prepared by people who know the formula, know the rules, and know how to present the case. I've been doing this for 32 years.
What an OIC Actually Is
An Offer in Compromise is an agreement where the IRS accepts less than what you owe. The IRS uses a specific formula based on your income, expenses, asset equity, and future earning potential. They call it your 'reasonable collection potential.' If your offer meets or exceeds that number, they'll consider it. If it doesn't, they won't.
Do You Qualify?
Not everyone does. I'll tell you upfront whether an OIC is realistic for your situation. No false promises. No wasted application fees. The IRS charges $205 just to apply, plus an initial payment. If your case doesn't support a low offer, I'll tell you that and we'll find a strategy that actually works.
Why Most OICs Get Rejected
Bad math. Missing documentation. Unrealistic expense claims. Filing an OIC without understanding the formula is like showing up to court without knowing the law. I calculate your reasonable collection potential before we submit anything. When I file an OIC, the numbers work.
The OIC Process
From start to finish, an Offer in Compromise takes 6 to 12 months. During that time, the IRS suspends collection activity. I prepare the application, gather your financials, calculate the offer amount, and handle all communication with the IRS examiner assigned to your case.