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IRS tax debt adds up fast. The notices keep coming. Then the IRS starts taking money from your paycheck, draining your bank account, and you’re left wondering what they’ll come after next. Millions of Americans owe back taxes right now. The IRS knows this, and their collection system never slows down.
At Silver Tax Group, we know how stressful this is on your family and your finances. That’s why we focus on Offers in Compromise, which let you settle your tax debt for less than you owe. We don’t make false promises or claim you’ll pay “pennies on the dollar.” We’re real tax attorneys who know how to work within the IRS system. If you qualify, we’ll push for the lowest settlement possible. If you don’t qualify, we’ll tell you that upfront.
An IRS Offer in Compromise is an agreement between you and the IRS that allows you to settle your tax debts for less than you owe. Essentially, it’s a compromise reached by both parties that suits the IRS and the taxpayer.
It’s a win-win since it offers the taxpayer a chance to get rid of their tax debt and start on a new path of financial freedom, and Uncle Sam gets his money.
This is a common way to resolve large tax debts that cannot be paid due to financial hardship or resolving situations involving accounts that are in Currently Not Collectible (CNC) status.
It’s also an effective tool to resolve tax debt matters without going through costly litigation or possibly facing jail time.
Typical Timelines:
*Important: If the IRS doesn’t make a decision within 24 months, your offer is automatically accepted by law.
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Schedule Your Free OIC ReviewAccording to the IRS Data Book, roughly 40% of Offer in Compromise applications get accepted nationally. That number changes yearly between 21% and 42%. Most rejections happen because taxpayers submit incomplete documents or don’t follow IRS Collection Financial Standards.
Silver Tax Group has secured approval on over 128 Offers in Compromise, reducing client tax debt by more than $15 million. Our attorneys know how the IRS calculates acceptable offers and how to present your finances to meet their standards.
Open bankruptcy is the most common reason you won’t qualify. If you have an ongoing audit, you cannot include those tax years in your offer until the audit finishes. Submitting an offer that is clearly too low given your finances can result in penalties.
The IRS accepts Offers in Compromise based on three different grounds. Most applicants qualify under the first type, but understanding all three helps determine which applies to your situation.
Doubt as to Collectibility is the most common type of Offer in Compromise. You use this option when you agree you owe the debt but cannot pay the full amount. The IRS calculates your Reasonable Collection Potential (RCP), and if it’s less than your total tax debt, you may qualify to settle for that amount.
You file based on Doubt as to Liability when you believe the tax debt itself is incorrect. This could be because the IRS assessed tax you don’t actually owe, made a calculation error, or you have evidence disputing the amount.
This type requires Form 656-L instead of the standard Form 656. You can submit an offer as low as $1 if you have strong evidence you don’t owe the debt.
Doubt as to Liability is less common but can be powerful when you have documentation supporting your position.
You file based on Effective Tax Administration when you technically could pay the full amount, but doing so would create exceptional hardship or would be unfair due to special circumstances.
This is the least common OIC type. The IRS grants it only in exceptional circumstances with strong documentation.
The IRS requires compelling documentation showing that collection would be inequitable or would cause undue economic hardship that outweighs the government’s interest in collecting the full amount.
With a lump sum offer, you pay 20% of your offer amount with your application. If the IRS accepts, you pay the remaining 80% within 5 months.
The IRS uses a 12-month multiplier for your income when calculating your Reasonable Collection Potential. This typically results in a lower total settlement compared to periodic payment offers.
With a periodic payment offer, you make monthly payments while the IRS reviews your application. If accepted, you continue monthly payments for 24 months total.
The IRS uses a 24-month multiplier for your income when calculating RCP. This results in a higher total settlement amount, but spreads payments over time.
If you can afford the lump sum option, it is almost always the better financial choice. The 12-month multiplier results in a lower total payment.
Periodic payment offers provide flexibility when lump sum is not possible. Some clients start with periodic payments while arranging funds, then convert to lump sum before acceptance. Our OIC attorneys help you choose the right option based on your finances and settlement goals.
The IRS uses a formula called Reasonable Collection Potential (RCP) to determine the minimum amount they’ll accept for your Offer in Compromise. Understanding this formula is why professional representation often results in significantly lower settlement amounts.
RCP = Net Asset Value + (Monthly Disposable Income × 12 or 24)
The multiplier is 12 months for lump sum offers or 24 months for periodic payment offers. This is why lump sum offers typically result in lower total settlement amounts.
DIY applicants often understate allowable expenses and overvalue assets using fair market value instead of quick sale value. Our tax attorneys calculate RCP correctly using IRS Collection Financial Standards, which typically results in a lower settlement amount.
| Form Name | Purpose | Description |
|---|---|---|
Form 656 | Offer in Compromise | Main application form for Doubt as to Collectibility and Effective Tax Administration offers |
Form 656-L | Offer in Compromise (Doubt as to Liability) | Application form when you dispute the amount of tax the IRS claims you owe |
Form 433-A (OIC) | Collection Information Statement for Wage Earners and Self-Employed | Detailed financial disclosure for individual taxpayers |
Form 433-B (OIC) | Collection Information Statement for Businesses | Detailed financial disclosure for business tax debts |
Form 656-B | Offer in Compromise Booklet | Instructions, worksheets, and checklists for completing your OIC |
Form 13711 | Request for Appeal of Offer in Compromise | Used to appeal a rejected OIC within 30 days of rejection |
Application Fee: $205 (non-refundable)
This fee is required with all OIC submissions. The IRS will not process your offer without it.
Low-Income Certification:
If your income is at or below 250% of the federal poverty level, you may qualify for Low-Income Certification. This waives the $205 application fee and reduces initial payment requirements.
For 2024, the poverty level threshold for a single person is approximately $36,450 annually. For a family of four, it’s approximately $75,000.
Initial Payment:
Initial payments are applied to your tax debt and are not refundable if your offer is rejected.
An Offer in Compromise (OIC) is an IRS settlement program that eliminates tax debt for less than the full amount owed. The IRS reviews your finances, accepts a lump sum or periodic payment, and permanently wipes out the remaining balance.
Once the IRS accepts your OIC and you pay the agreed amount, that tax debt is resolved permanently. If you’re facing an IRS balance you can’t pay in full, schedule a free case review to see if you qualify.
You may qualify for an OIC if you meet four IRS eligibility requirements and your Reasonable Collection Potential (RCP) falls below your total tax debt.
Meeting these requirements gets your application reviewed. The IRS then calculates your RCP using your income, monthly expenses, and asset equity. If your RCP is lower than what you owe, you may qualify. A professional evaluation before applying shows exactly where you stand and whether OIC makes sense for your situation.
The IRS calculates your minimum acceptable offer using the Reasonable Collection Potential (RCP) formula. Net Asset Value plus Monthly Disposable Income multiplied by 12 or 24 months equals your RCP.
Most accepted OICs settle between 10% and 30% of total tax debt. Your specific settlement depends entirely on your financial picture. Tax attorneys often reduce your RCP by maximizing allowable expenses under IRS Collection Financial Standards, which lowers your required offer amount.
The IRS accepts approximately 40% of OIC applications based on IRS Data Book statistics. Acceptance rates fluctuate between 21% and 42% depending on the year.
Most rejections happen because applicants make preventable mistakes. Tax attorneys who handle OIC cases regularly achieve higher acceptance rates because they understand IRS requirements, calculate RCP correctly, and prepare applications that meet IRS standards from the start.
Most OIC cases take 6 to 24 months from submission to final IRS decision. Timeline depends on your payment option and case complexity.
During this time, IRS collection activity stops. The IRS cannot levy your wages or bank accounts while your offer is pending. If the IRS doesn’t issue a decision within 24 months of submission, your offer is automatically accepted by law under IRC Section 7122.
You have 30 days from rejection to file an appeal using IRS Form 13711. Appeals go to the IRS Independent Office of Appeals, where many initially rejected offers get approved.
If appeal isn’t the right path, these alternatives exist. Each option has different qualification requirements and long-term consequences. A rejected OIC doesn’t close every door. Our tax attorneys review your rejection letter and identify which option gives you the best outcome.
An Offer in Compromise settles your tax debt for less than you owe. An Installment Agreement pays the full balance over time with interest.
OIC saves more money if you qualify, but the IRS requires documented financial hardship. Installment Agreements are easier to obtain but cost more over time due to accruing interest and penalties. Many taxpayers who assume they only qualify for an Installment Agreement actually qualify for OIC.
The IRS charges a $205 non-refundable application fee. You also submit an initial payment with your OIC application.
Our firm uses flat-fee pricing for OIC preparation, so you know the total cost before we start work on your case. Schedule a free case review to get your fee quote and eligibility assessment.
The longer you wait, the more penalties and interest add to what you owe. The IRS doesn’t stop collection activity on its own. Wage garnishment, bank levies, and tax liens only get worse with time.
We offer a free case evaluation to review your finances, calculate your estimated offer amount, and tell you honestly whether Offer in Compromise is right for your situation. No obligation, no pressure, no cost to find out where you stand.
Call now or fill in the form below to get help with your tax and IRS issues today.
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