Offer in Compromise
Settle IRS tax debt for less than you owe
An Offer in Compromise is an IRS program that allows qualifying taxpayers to resolve their entire tax liability for a fraction of the full amount. Our Enrolled Agents have prepared and defended OIC applications on balances from $10,000 to over $95 million.
Enrolled Agents IRS-certified
All 50 states Nationwide
6-12 months Typical timeline
How an Offer in Compromise works
The IRS evaluates three factors when reviewing an OIC: your monthly income minus allowable living expenses, the equity in your assets, and your overall ability to pay. This calculation produces your "reasonable collection potential" — the amount the IRS believes it could collect from you over the remaining time on the statute of limitations.
If your offer meets or exceeds that number, the IRS has a basis to accept. Our Enrolled Agents handle every step: gathering financial documentation, calculating your reasonable collection potential, preparing IRS Form 656 and Form 433-A (or 433-B for businesses), submitting the application with the required fee, and defending the case through the examiner's review.
Why representation matters
The IRS rejects approximately 57% of OIC applications — often due to incomplete financial documentation or miscalculated offers. Applications prepared by experienced Enrolled Agents are built correctly from the start, significantly improving acceptance rates.
Do you qualify?
You may qualify for an Offer in Compromise if one or more of the following apply to your situation:
Your monthly income, after IRS-allowed living expenses, leaves little or no money to pay the full balance. Your assets have limited equity. The amount the IRS could reasonably collect over the remaining collection statute is significantly less than what you owe. This is also known as doubt as to collectability.
Some taxpayers may also qualify if the assessed tax may be incorrect (doubt as to liability) or if paying the full balance would create significant financial hardship or an unfair outcome based on exceptional circumstances.
57%
IRS rejection rate for OIC
applications filed without
professional representation
CLIENT RESULT - MARRIED FILING JOINTLY
$4.2 million in IRS debt settled for $38,000
$4.2M
Original debt
$38K
Settlement
<1%
Of original
Offer in Compromise
A husband and wife facing a $4.2M IRS liability engaged LMU Consulting Group. Our Enrolled Agents prepared and defended an Offer in Compromise, resulting in a settlement of less than 1% of the original balance.
Lump sum vs. periodic payment
There are two payment structures for an accepted OIC:
Lump sum offer
Requires 20% of the proposed amount upfront with the application. The remaining balance is paid in five or fewer installments after acceptance. This is the more common option and typically results in a lower total settlement.
Periodic payment offer
Allows monthly payments over 6 to 24 months. Payments begin while the IRS reviews the application — they are not refundable if the offer is rejected. Our team evaluates which structure produces the lowest total settlement for your specific financial picture.
After the IRS accepts your OIC
Once accepted, you must remain in full tax compliance for five years. That means filing all tax returns on time and paying any new tax liabilities in full. If you fall out of compliance during this period, the IRS can void the agreement and reinstate the original balance.
We monitor your case after acceptance and coordinate with your tax preparer to help you stay compliant. This monitoring is part of our commitment to the resolution — not an add-on.
Not sure if OIC is right for you?
An Offer in Compromise isn't for everyone. If the IRS determines that you can pay the full balance (even over time), they'll reject the application. In those cases, an installment agreement built around your real cash flow may be the stronger path.
If you're currently facing a bank levy or wage garnishment, we pursue emergency relief on the same day you engage us — the OIC process runs in parallel.
And if IRS penalties have inflated your balance, we evaluate penalty abatement first to reduce the total amount before submitting the offer.
Offer in Compromise questions
Common questions we hear from clients considering an OIC.
How long does an Offer in Compromise take? The IRS typically takes 6 to 12 months to process an OIC application. During this time, collection activity is generally suspended. Our Enrolled Agents monitor the case throughout and respond to any IRS requests promptly.
What is the minimum offer the IRS will accept? There is no fixed minimum. Your offer must meet or exceed the IRS's calculation of your reasonable collection potential — based on your income, expenses, and asset equity. We calculate this before submitting to ensure the offer is viable.
Can I submit an OIC for payroll taxes? Yes. Businesses with payroll tax liabilities, including trust fund recovery penalties assessed against responsible individuals, can submit an OIC. The same financial analysis applies.
What happens if my OIC is rejected? You have 30 days to appeal through the IRS Office of Appeals. We prepare and file the appeal and represent you through the process. In some cases, the appeal results in a revised offer being accepted.
Do I need to be current on all tax filings? Yes. The IRS requires all tax returns to be filed before they will consider an OIC. If you have unfiled returns, we coordinate with your tax preparer or prepare them as needed before submitting.