How much will the IRS accept for an Offer in Compromise?

The IRS generally accepts an OIC when the offered amount equals or exceeds your Reasonable Collection Potential (RCP).

How long does the OIC process take?

The IRS typically takes 7-12 months to process an Offer in Compromise.

Offer in Compromise (OIC): The Complete Guide

Q: What is an Offer in Compromise?

An Offer in Compromise (OIC) is an IRS program that allows eligible taxpayers to settle their tax debt for less than the full amount owed.

An Offer in Compromise (OIC) lets you settle your IRS tax debt for less than you owe. In 2023, the IRS accepted about 30% of all OIC applications.

What Is an Offer in Compromise?

An Offer in Compromise is a formal agreement between you and the IRS to settle your tax liability for less than the full amount.

Who Qualifies for an OIC?

To be eligible, you must meet all of these requirements:

Filed all required tax returns
Not in an open bankruptcy proceeding
Made all required estimated tax payments for the current year
Not currently in an open audit

How the IRS Calculates Your Offer Amount

The IRS uses a formula called the Reasonable Collection Potential (RCP):

RCP = Future Income + Net Equity in Assets

How to Apply

Check eligibility using our calculator above
Complete IRS Form 656
Complete Form 433-A
Pay the $205 application fee
Include your initial payment
Mail everything to the IRS

Sources

Disclosure: TaxClear may receive compensation when you are connected with a tax professional through our referral program. This does not affect our recommendations or the information we provide. Learn how we make money.