When you owe more to the IRS than you can realistically pay, it can feel like there’s no way out. Fortunately, there is a powerful—but highly selective—program that might offer a solution: the Offer in Compromise (OIC).
At Jablonsky Tax Relief, we help taxpayers determine if they qualify for this program and guide them through the complex application process. Read on to learn how it works, who qualifies, and how we can help you take the next step.
What Is an Offer in Compromise?
An Offer in Compromise is an agreement between a taxpayer and the IRS that settles the tax debt for less than the full amount owed. It’s designed for people who genuinely cannot afford to pay their full tax bill, either in a lump sum or over time.
The IRS will only approve an OIC if it believes:
- You don’t have the income or assets to pay the full amount, and
- Your offer reflects the maximum they could reasonably collect from you within the statute of limitations.
Who Qualifies for an Offer in Compromise?
The OIC program has strict eligibility requirements. Not everyone who owes taxes will qualify. Here’s what the IRS looks at:
- Ability to pay – Based on your income, expenses, assets, and equity.
- Current compliance – You must be current with all required tax filings and estimated payments.
- No open bankruptcy – You can’t be in an active bankruptcy proceeding.
- Reasonable collection potential (RCP) – If the IRS believes they could collect more from you through other means, they’ll likely reject your offer.
If you’re living paycheck to paycheck, have limited assets, or are facing a long-term financial hardship, you may be a good candidate. However, submitting an OIC without professional guidance often leads to rejection, which is why working with a tax resolution expert is critical.
Example: When an OIC Might Work
Let’s say Maria, a self-employed single mother, owes the IRS $42,000 in back taxes from several years of unfiled returns. After getting back on track, she now earns about $3,200/month and has no valuable assets or savings.
By the time she pays rent, utilities, child care, and other essentials, there’s little left. Her financial documents show that paying the full tax debt would leave her unable to afford basic living expenses.
With the help of a tax resolution professional, Maria submitted an Offer in Compromise for $3,200—the amount the IRS determined was the most they could reasonably collect from her. After a thorough review, the IRS accepted the offer, wiping out the remaining $38,800 in debt and giving Maria a fresh start.
How We Can Help
The Offer in Compromise process is paperwork-heavy, time-sensitive, and often denied if not submitted correctly. At Jablonsky Tax Relief, we:
- Evaluate your eligibility using the IRS’s formula
- Calculate your Reasonable Collection Potential
- Help you avoid common mistakes that lead to rejection
- Prepare and submit a complete, professional application
- Negotiate directly with the IRS on your behalf
Even if you don’t qualify for an OIC, we’ll explore other tax relief options that better fit your situation, like Installment Agreements or Currently Not Collectible status.
Ready to See If You Qualify?
An Offer in Compromise can be life-changing—but only if you meet the IRS’s strict criteria. Don’t waste time submitting a weak offer that gets denied. Let us evaluate your case and help you determine the best path forward.
