When you’re behind on your taxes, it can feel like the IRS is breathing down your neck — letters, threats, penalties, and the looming fear of garnishments or levies. But what if there was a way to settle your debt for less than you owe? That’s where the Offer in Compromise (OIC) comes in.
What Is an Offer in Compromise?
An Offer in Compromise is a program offered by the IRS that allows you to settle your tax debt for less than the full amount you owe — legally. It’s designed for people who are unable to pay their full tax liability, or doing so would create financial hardship.
The IRS only accepts OICs when:
- You don’t have the income or assets to pay the full amount.
- You’ve filed all required tax returns.
- You’re not currently in bankruptcy.
So yes — the IRS will cut a deal, but it’s not as simple as asking for one.
Do I Qualify for an Offer in Compromise?
Not everyone does. The IRS looks at your income, assets, expenses, and future earning potential to determine whether your offer is acceptable.
Here are a few questions to consider:
- Are you behind on taxes with no realistic way to pay them off within the next few years?
- Do you struggle to cover basic living expenses like rent, utilities, or groceries?
- Have you experienced major life changes — job loss, illness, divorce, etc.?
If you answered yes to any of these, you may be a candidate for an OIC.
How Much Can I Settle For?
This is where the IRS gets strict. They’ll calculate the “Reasonable Collection Potential” (RCP) — essentially, what they think they can realistically collect from you.
If your RCP is less than what you owe, they might accept your offer. It’s not about what you want to pay; it’s about what you can pay, based on hard numbers.
💡 Example:
If you owe $50,000 but the IRS determines your RCP is $8,000, they may accept an offer around that number.
What’s the Process Like?
The OIC process is documentation-heavy and slow. Here’s a rough outline:
- Prepare IRS Form 656 (Offer in Compromise) and Form 433-A (Collection Info Statement)
- Submit with the required application fee and initial payment
- Wait for the IRS to review — which can take 6–12 months
- If approved, meet the terms of your agreement, including staying current with future taxes
Pro tip: Don’t go it alone. One small mistake can cost you time and money.
Should I Hire a Tax Professional?
In most cases — absolutely. OICs are complex and require:
- Deep knowledge of IRS guidelines
- Skilled financial presentation of your case
- A strategy that makes your offer reasonable but beneficial to you
We’ve helped many clients reduce tens of thousands in tax debt through careful planning and negotiation.
Final Thoughts
Yes, you can settle with the IRS — but only if you qualify, and only if your case is presented the right way. An Offer in Compromise can be a life-changing solution, giving you a fresh start and peace of mind. But it’s not a DIY project. If you’re considering it, get professional support to do it right.
📌 If you’re drowning in tax debt and unsure what to do next, reach out to us today. Let’s see if you qualify for an Offer in Compromise — and get you some breathing room.
💼 Ready to See If You Qualify for an IRS Settlement?
Don’t wait for the next IRS letter to show up. If you’re behind on taxes and overwhelmed by penalties or debt, we can help you explore real, legal options — including an Offer in Compromise.
📞 Book a free consultation today and let us review your situation. We’ll tell you the truth, give you a clear strategy, and fight to get you the best possible outcome.
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Castle Rock Tax Solutions – Over 30 years of trusted experience, 100% virtual, bilingual, and results-driven.