IRS Tax Relief

Tax Relief Knowledge Source

Offer in Compromise

Do I qualify for an Offer in Compromise?

Everyone who gets behind on their taxes, especially those in particularly financially challenging situations, wants to know if they qualify for the holy grail of tax relief–the Offer in Compromise (OIC).


For most of you, whether you are honest, a tax cheat, down on your luck, or just pissed off about paying taxes, the Offer in Compromise (OIC) will not be a viable option. If all you want is a way to not pay the IRS what you owe, you are out of luck.

  • If you can pay over time or sell something you own that is worth your tax debt, the IRS will likely not accept your Offer in Compromise (OIC).
  • If you are young and have good earning potential, the IRS will likely not accept your Offer in Compr0mise (OIC).
  • If you are in the middle of filing for bankruptcy (which most people do not realize does not excuse you from paying your tax debt in most cases), the IRS will likely not accept your Offer in Compromise (OIC).

If you have read all this and you still think you might qualify for an Offer in Compromise (OIC), read through this site to learn more about the program, how it works, whether you might qualify, and how to apply.

Again, most of you won’t qualify for this. You are likely better off filing any old tax returns you failed to file and working out a payment plan with the IRS on the final liability. The Offer in Compromise (OIC) is seldom the answer. With that said, the Offer in Compromise program is an incredible option for people who truly cannot afford to pay their taxes. With acceptance percentages of somewhere between $0.12 and $0.20 on the dollar, taxpayers who qualify for an OIC can have a huge financial burden lifted if they are part of the lucky minority.

Offer In Compromise Facts

  • In 2005, the OIC Program accepted offers in which taxpayers paid on average 16 percent of their tax liability. On every offer the IRS accepted, the taxpayer paid an average of $0.16 on every dollar they owed. A retired couple with a tax debt of $22,000 would pay only $3,520 if they qualified and were approved by the IRS.
  • For years, Congress has been concerned about the performance of the OIC Program. Concerns include the timeliness of offer processing, the quality of offer decisions, and the accessibility of the program to taxpayers.
  • An IRS study published in 2004** (which I see references to but cannot locate online) found that only a small number of offers submitted with the help of a tax representative were abusive. The IRS concluded that tax representation firms and even offer mills were not driving abuse in the system.
  • In fiscal year 2005, 40 percent of the offers received were repeat offers. That means taxpayers are having to submit multiple Offers in Compromise before they are being accepted by the IRS, indicating people are not effectively filling out their paperwork and completing the process the way the IRS wants them to.
  • IRS resolves less than 1 percent of all balance due accounts through the OIC Program.

** Department of the Treasury, Internal Revenue Service SB/SE Payment Compliance and
Office of Program Evaluation and Risk Analysis, IRS Offers in Compromise Program:
Analysis of Various Aspects of the OIC Program (Washington, D.C.: September 2004).