Offer in Compromise

An Offer in Compromise (OIC) is one of the most desired tax resolutions for taxpayers owing money to the IRS and State taxing authorities, but there is often a great deal of confusion surrounding it. Let’s break down what an Offer in Compromise is and how you can be approved for one.

What is an Offer in Compromise?

An Offer in Compromise is an agreement between you and the IRS which resolves your tax liability by allowing you to pay back less money than the total amount you owe. For instance, an OIC might allow a taxpayer to pay only $5,000 to resolve $100,000 worth of tax liability. Most State taxing authorities also have State OIC programs that may have different name variations and different procedures.

Both individuals and businesses can qualify for the IRS OIC. Because of the IRS’s in-depth review process, an OIC can take up to 24 months to be approved or denied. However, if an Offer is approved, you can save thousands of dollars in the repayment of your tax liability.


How can I get my Offer in Compromise approved?

Because an Offer in Compromise is extremely beneficial for a taxpayer, the IRS adheres to a strict approval standard for this resolution. There are only 3 situations in which the IRS will approve an Offer in Compromise:

  1. Doubt as to Liability: There is doubt that the liability exists or that the liability amount is correct.
  2. Doubt as to Collectibility: There is doubt that the taxpayer could ever pay the full amount of tax owed.
  3. Effective Tax Administration: There is no doubt the tax is correct or that the amount owed could be paid-in-full, but full payment would either create an economic hardship or would be unfair or inequitable because of exceptional circumstances.

While the 3 situations are relatively straightforward, the process of pre-qualification, submission, and negotiation are not. It is best to hire a professional who can understand your unique situation and has expertise in the intricacies of the IRS OIC program.

We can help you decide whether an Offer in Compromise is the best solution for you. Call us for a free consultation at (855) 529-3214.


There is no general rule for determining how much you should offer the IRS, and the amount is dependent upon your unique personal and financial situation. Our in-depth analysis can help you determine what you should offer.

Yes, some State taxing authorities provide an Offer in Compromise program; but it is not available everywhere. Check with your state tax agency or give us a call to learn if it’s available in your state.

You must complete a Collection Information Statement as well as the Offer in Compromise application.