I would like to take a moment to express my sincere appreciation for the excellent service and representation I received from my lawyer Parkam. Throughout the entire process, he was extremely professional, efficient, and successful in handling my case. Every time I called, he was always responsive, answered my questions promptly, and made sure everything was handled exactly the way I wanted. His dedication, communication, and attention to detail gave me great confidence and peace of mind. I truly appreciate all the hard work and effort that was put into achieving the best possible outcome. I highly recommend his services to anyone looking for a trustworthy, knowledgeable, and results-driven attorney. Thank you again for the outstanding support and professionalism.
The IRS's Acceptance Criteria for Offers In Compromise
Learn the IRS's acceptance criteria for offers in compromise, including eligibility, financial requirements, and steps to submit your offer successfully.
Understanding these criteria is essential when considering an Offer in Compromise. It's often advisable to consult with a tax professional or attorney who can assess your specific situation and guide you through the process effectively.
Frequently Asked Questions
What is the IRS's Offer in Compromise (OIC) program, and how does it work?
An Offer in Compromise is an IRS program that lets qualifying taxpayers settle their tax debt for less than the full amount owed. You submit a formal offer along with detailed financial information, and the IRS reviews your ability to pay before deciding whether to accept. The most common basis is doubt as to collectibility, meaning the IRS does not expect to collect the full balance within a reasonable time. Whether an offer is a realistic option depends heavily on your finances, so a tax professional can help you evaluate it.
What are the IRS's acceptance criteria for OICs?
When reviewing an offer, the IRS generally calculates your reasonable collection potential by examining your income, allowable living expenses, and the equity in your assets. An offer is typically considered when the amount offered reflects what the IRS could reasonably expect to collect over time. The agency also requires that you be current with filing all required returns and with estimated tax payments. Because these calculations follow specific formulas, professional guidance can help you understand how your numbers may be viewed.
How do I determine if I'm eligible for an OIC?
Basic eligibility generally requires that you have filed all required tax returns, made any required estimated payments, and are not in an open bankruptcy proceeding. Beyond those threshold rules, the IRS looks at whether your income and assets suggest you cannot pay the full balance within the collection period. The IRS offers a pre-qualifier tool on its website that can give you a preliminary sense of eligibility. For a more complete assessment, consider reviewing your circumstances with a qualified tax professional.
What financial information do I need to provide with my OIC application?
An offer based on inability to pay is submitted with Form 656 and a Collection Information Statement, typically Form 433-A (OIC) for individuals or 433-B (OIC) for businesses. These forms require detailed disclosure of your income, monthly living expenses, bank accounts, real estate, vehicles, and other assets. You will generally also need to attach supporting documentation such as pay stubs, bank statements, and proof of expenses. Preparing this package accurately is important, and a tax professional can help ensure the financial picture is presented correctly.
Is there a minimum or maximum amount of tax debt required for an OIC?
There is no minimum tax debt required, but there is no specific maximum limit. However, OICs are generally more commonly accepted for larger tax debts where full payment would be genuinely unaffordable.
What is the likelihood of the IRS accepting an OIC?
Acceptance depends entirely on your individual financial situation and how it compares to the amount you are offering, so no general probability applies to every case. The IRS evaluates each offer against your reasonable collection potential and other eligibility requirements. Offers that realistically reflect what the IRS could collect are more likely to receive serious consideration than those that do not. A tax professional can help you assess whether an offer is a sensible path for your circumstances before you apply.
Can the IRS reject my OIC application?
Yes. The IRS can reject an offer if it concludes you can pay the full balance through a payment plan or from your assets and income, or if the offered amount is below your reasonable collection potential. An offer can also be returned without consideration if you are not current on filings or required payments, or if requested information is missing. If your offer is rejected, you generally have the right to appeal within 30 days. Discussing the reasons with a tax professional can help you decide on next steps.
Is there a fee to apply for an OIC?
There is generally an application fee plus an initial payment that must accompany the offer, with the payment amount depending on whether you choose the lump-sum or periodic-payment option. Low-income taxpayers who meet the IRS guidelines may qualify for a waiver of the application fee and the initial payment. Fee amounts and thresholds can change, so it is wise to confirm the current figures on the IRS website or with a tax professional before submitting.
What happens if my OIC is accepted by the IRS?
If your offer is accepted, you must pay the agreed amount under the terms you selected and stay in full compliance with filing and payment obligations, generally for the following five years. The IRS will release any related federal tax liens once the offer terms are satisfied. Failing to meet the post-acceptance conditions can cause the agreement to default and the original balance, plus interest and penalties, to be reinstated. A tax professional can help you understand the ongoing obligations that come with an accepted offer.
What if my OIC is rejected? Can I appeal the decision?
If the IRS rejects your offer, it will send a letter explaining the reasons, and you generally have 30 days to file an appeal using Form 13711. The appeal lets you ask the IRS Independent Office of Appeals to review the determination, and you can provide additional information or correct calculations that may have affected the outcome. You may also have other resolution options, such as an installment agreement. Reviewing the rejection with a tax professional can help you choose the most appropriate response.
Should I seek professional help when applying for an OIC?
Remember that the OIC process can be complex, and professional guidance can be valuable when navigating the IRS's acceptance criteria and requirements.
Request a free consultation with our experts today and take the first step towards achieving your goals.
This content was written and reviewed by the licensed tax attorneys at Victory Tax Lawyers, LLP. Our attorneys specialize in IRS tax relief and are licensed members of the California State Bar with a nationwide practice.
Last Reviewed: 2026 · Meet Our Attorneys →
Attorney Advertising. Prior results do not guarantee a similar outcome. This website is for informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by viewing or using this website. For legal advice, please schedule a consultation.
© Victory Tax Lawyers © 2026. All rights reserved. Powered by GLP Marketing
Tax Relief
Ready to Resolve Your Tax Issues?
Our experienced tax attorneys have saved clients over $91 million. Get a free, confidential consultation today.