Offer in Compromise
Settle your IRS tax debt for less than the full amount owed through effective negotiation with an Offer in Compromise.
Settle Tax Debt in 4 Easy Steps!
Need Offer in Compromise Help? Check If You Qualify
What is an Offer in Compromise?
An Offer in Compromise (OIC) is an IRS program that allows taxpayers to settle their tax liability for less than the full amount owed, offering relief for those experiencing financial hardship or economic hardship. The IRS evaluates each application based on the taxpayer's financial situation, including income, expenses, and asset equity, to determine a reasonable collection potential (RCP). Payment options for settling the debt include lump sum payment plans and installment agreements.
Eligibility Requirements for an Offer in Compromise
- All required tax returns must be filed, no unfiled returns can remain open.
- Estimated tax payments must be made for the current year, if required.
- You cannot be in an active bankruptcy case at the time of your application.
- You must demonstrate financial hardship, showing that full payment would cause economic distress.
- Your offer must reflect your reasonable collection potential (RCP) — the most the IRS believes it can collect from you.
- A complete and accurate financial disclosure must be submitted (Form 433-A(OIC) or 433-B(OIC)).
- All application fees and initial payments (20% for lump sum) must be submitted with your offer unless you qualify for a fee waiver.
Our IRS tax settlement attorneys have guided hundreds of clients through the OIC process and can help you assess your eligibility. To learn more if you qualify for an Offer in Compromise read here.
Offer in Compromise Success Stories
$1,500
Offer Amount Accepted
Total Debt: $60,000
Debra K.
$100
Offer Amount Accepted
Total Debt: $57,000
Ian M.
$1,000
Offer Amount Accepted
Total Debt: $88,000
Nicholas G.
$100
Offer Amount Accepted
Total Debt: $83,000
Eryka A.
$80
Offer Amount Accepted
Total Debt: $32,000
Deseree W.
$1,074
Offer Amount Accepted
Total Debt: $38,000
Dennis J.
$2,500
Offer Amount Accepted
Total Debt: $43,000
Anthony C.
$25
Offer Amount Accepted
Total Debt: $40,000
Tommy B.
$21,000
Offer Amount Accepted
Total Debt: $302,401
Valerie B.
$60,300
Offer Amount Accepted
Total Debt: $1,622,404
Kenneth J.
$157
Offer Amount Accepted
Total Debt: $10,000
Chris A.
$168
Offer Amount Accepted
Total Debt: $30,000
Heather N.
How Much Should You Offer in OIC?
Most rejected offers have one thing in common: the amount was wrong. The IRS doesn’t negotiate based on what feels fair—they use a strict formula to decide what they expect to collect. That number, called your Reasonable Collection Potential, often surprises taxpayers. Offer less than that, and your case is likely dead on arrival. Offer more than necessary, and you could be locking yourself into a deal that drains your finances.
Key factors that determine your RCP include:
- Monthly income, minus allowable living expenses as defined by IRS standards
- Future earning potential, especially if your income is expected to increase
- Equity in assets, including your home, car, savings, investments, and personal property
- Time remaining in the 10-year IRS collection window
If your offer is accepted, the IRS gives you two ways to pay: a lump sum payment, where you settle the full amount in five or fewer payments, or a periodic payment plan, which spreads your payments over 6 to 24 months. Each option has strict rules, and the one you choose can impact both your approval odds and your financial flexibility moving forward. Choosing the right structure is just as important as calculating the right offer.
To fully understand the financial requirements and ensure eligibility for an Offer in Compromise, please refer to the detailed Offer in Compromise Booklet or use the IRS pre qualifier tool.
How Our IRS Attorneys Simplify Tax Debt
Financial Analysis
Our expert tax attorneys review your total tax debt, including penalties and interest, to develop personalized resolution strategies.
Application Process
Our certified team of IRS debt attorneys assists in preparing IRS Form 656-B, IRS Form 433-A (for individuals) or Form 433-B (for businesses)
IRS Negotiation
The next step is engaging in negotiation with the IRS to secure the most favorable terms for your tax resolution.
Legal Support
Our expert offer in compromise lawyers provides rigorous support throughout your application process.
Financial Analysis
Our expert tax attorneys review your total tax debt, including penalties and interest, to develop personalized resolution strategies.
Application Process
Our certified team of IRS debt attorneys assists in preparing IRS Form 656-B, IRS Form 433-A (for individuals) or Form 433-B (for businesses)
IRS Negotiation
The next step is engaging in negotiation with the IRS to secure the most favorable terms for your tax resolution.
Legal Support
Our expert offer in compromise lawyers provides rigorous support throughout your application process.
The OIC process typically takes around 6 to 12 months, and approval isn’t guaranteed. In 2024, the IRS approved just 21% of nearly 33,600 applications. We know what it takes to be in that 21%.
Why Do You Need a Professional Tax Attorney?
The truth is, most Offer in Compromise applications are denied—not because the taxpayer didn’t qualify, but because the offer wasn’t filed properly. At J. David Tax Law, we’ve built our reputation on results. Our team maintains a 95% acceptance ratefor all Offers in Compromise we submit on behalf of qualified clients.
With over four decades of collective experience, we’ve helped clients resolve tax issues in all 50 states, backed by over 500 verified 5-star reviews nationwide. We offer free consultations, and our firm has earned top industry recognition, including the A+ BBB rating, and multiple prestigious awards.
If you don’t qualify for an OIC, we don’t stop there. We explore every viable alternative, from penalty abatement to partial pay installment agreements and currently not collectible status—all designed to minimize what you ultimately pay.
Free consultation
Speak to one of our managing attorneys today to find out how you can resolve your tax matter.
What Are Your Next Steps If Declined for an Offer in Compromise?
If a person does not qualify for an Offer in Compromise (OIC) with a tax authority, there are several alternative options to consider for managing tax liability. Here are some other avenues to explore:
Denied an Offer in Compromise? Discover the next steps to manage your tax debt effectively.
Payment Plans / Installment Agreements
Temporary Delay of Collection
Penalty Abatement
Appealing a Decision
Checking for Hardship Provisions
What is an Offer in Compromise and how does it work?
Who is eligible to apply for an Offer in Compromise?
How much does it cost to do an Offer in Compromise?
How to calculate allowable living expenses for an IRS OIC?
The IRS calculates allowable living expenses using a combination of national and local standards based on your household size, income level, and geographic location. Each expense category, like housing, food, transportation, and medical costs has a predefined cap. These limits are published by the IRS and updated annually.
To calculate your allowable expenses, compare your actual spending in each category to the IRS limit. Any amount above the IRS standard is disallowed, and the excess is treated as available income unless you can prove it’s necessary. That’s why working with a tax attorney is important: we help ensure each line is justified, optimized, and defensible.
How much should I offer in compromise to the IRS?
What is the success rate of Offer in Compromise?
Additional Resources
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