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Settle your IRS tax debt for less than the full amount owed through effective negotiation with 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).
To be considered for an IRS Offer in Compromise, you must meet all of the following criteria:
To learn more if you qualify for an Offer in Compromise read here.
Offer Amount Accepted
Total Debt: $60,000
Debra K.
Offer Amount Accepted
Total Debt: $57,000
Ian M.
Offer Amount Accepted
Total Debt: $88,000
Nicholas G.
Offer Amount Accepted
Total Debt: $83,000
Eryka A.
Offer Amount Accepted
Total Debt: $32,000
Deseree W.
Offer Amount Accepted
Total Debt: $38,000
Dennis J.
Offer Amount Accepted
Total Debt: $43,000
Anthony C.
Offer Amount Accepted
Total Debt: $40,000
Tommy B.
Offer Amount Accepted
Total Debt: $302,401
Valerie B.
Offer Amount Accepted
Total Debt: $1,622,404
Kenneth J.
Offer Amount Accepted
Total Debt: $10,000
Chris A.
Offer Amount Accepted
Total Debt: $30,000
Heather N.
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:
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.
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.
Our expert tax attorneys review your total tax debt, including penalties and interest, to develop personalized resolution strategies.
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)
The next step is engaging in negotiation with the IRS to secure the most favorable terms for your tax resolution.
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%.
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 rate for 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 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.
An Offer in Compromise (OIC) allows taxpayers to settle their federal tax liabilities for less than the full amount they owe. It’s intended for cases where paying the full amount would create a financial hardship. The IRS considers the taxpayer’s income, expenses, and asset equity when determining eligibility. To learn more about Offer in Compromise
To qualify for an OIC, individuals must meet strict requirements, including being up-to-date with all filing and payment requirements and not being in an open bankruptcy proceeding. The IRS also evaluates the taxpayer’s ability to pay, income, expenses, and asset equity.
An Offer in Compromise requires a $205 application fee, plus an initial payment, usually 20% of your offer amount if choosing the lump sum option. However, if you meet the IRS low-income certification guidelines, the fee and initial payment may be waived. To calculate allowable living expenses, the IRS uses standardized amounts based on your family size, income, and location,not your actual spending.
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.
The amount to offer in an OIC should realistically reflect your reasonable collection potential (RCP), which includes the value of your assets and the amount the IRS could collect from your future income within a reasonable period. Using the IRS pre-qualifier tool can help determine an appropriate offer based on your financial situation.
According to the IRS Data Book for fiscal year 2024, the Offer in Compromise (OIC) success rate was approximately 21%. Out of nearly 33,600 applications, the IRS accepted just 7,199 offers. That means only about 1 in 5 applicants had their offer approved. The low approval rate is often due to incomplete documentation, incorrect offer amounts, or failure to meet basic eligibility requirements. At J. David Tax Law, our acceptance rate for qualified clients is over 95%, because we understand what the IRS looks for and how to structure offers that get results.
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