Home
>
Tax
>
IRS Offer-in-Compromise, Hype or Hope?

IRS Offer-in-Compromise, Hype or Hope?

"Settle for Pennies on the Dollar! IRS debts settled for $20 Wipe out the Penalties with an Offer"-such is the language of Offer-in-Compromise promoters. What they fail to tell you is that one has to qualify for an Offer and few taxpayers will be able to meet the tough standards for an OIC.

The Offer-in-Compromise (OIC) has been around for a long time, but it wasn't until 1992 that IRS started really using the program in good faith. After the Revenue Reform Act of 1998, IRS became even more liberal with the OIC. At one point almost half of all Offers were being accepted. Unfortunately, in 2002, the IRS started getting tough on Offers and now only about 25% of all Offers are accepted. The main reason for the decline was the centralization of Offers at two IRS locations instead of them being worked locally at the district offices.

An Offer can be made for "Doubt as to Liability" or "Doubt as to Collectability." Submitting a proper OIC is more than just filling out an IRS Form 656. A good offer must have 3 recent months of supporting documentation attached with the Form 656 (if the OIC is for doubt as to collectability). Failure to fill out the Form 656 properly, failure to include all liabilities, or failure to provide the documentation required results in an Offer that is dead on arrival. Even if the forms are complete and the data provided; the Offer is now just "processable" and 6-9 months may go by before a decision is reached on the merits of the OIC.

Unscrupulous Offer Promoters often don't qualify people for the Offer, they just sell them a bill of goods. Folks can pay thousands and not have a chance at an OIC to begin with! Don't do business with anybody that doesn't at least take a full financial statement from you. If the matter is Doubt as to Liability, no financial is required, but there needs to be a solid basis for the claim in law and policy.

The main items that often sink an Offer when someone does qualify based on income and expenses are assets such as IRAs, 401Ks and home equity. If you owe the IRS 25K but you have an IRA worth 50K and home equity of 50K, forget about an OIC. There would have to be a horrible circumstance in your life to get past the equity in assets. In very rare cases of health or old age, exceptions can be made. Just because you can't pay your bills on time doesn't make you an Offer candidate. You must not be able to full pay based on income and expenses plus the "quick sale" value of your assets. Only then is a Doubt at to Collectability Offer an option.

If you qualify, you really can settle for "pennies on the dollar," but it might be 30-50% of your debt based on the math. To settle for $500 you would have to be broke with no assets at all and no prospects for near term improvement of your financial situation. See a CPA, Tax Attorney, or Enrolled Agent if you are considering an Offer. They can go over all of your options.

You can learn more about Offers at these websites:

www.irs.gov
www.naea.org
www.nsacct.org
www.etaxes.com
www.exirsman.com

James Robert Coleman, E.A., A.T.A.
Enrolled Agent, Accredited Tax Advisor, former IRS Revenue Officer. Member-National Association of Enrolled Agents & National Society of Accountants.

move in cleaning service Mundelein ...

In The News:

ShareAScan turns T-shirts into scannable digital business cards with QR codes that link to profiles the owner can update anytime they choose.

BragJack research reveals how a single malicious browser extension could hijack Gemini, Perplexity Comet and Edge AI agents with zero clicks.

A phishing campaign impersonating OpenAI uses fake ChatGPT billing emails with a convincing login page to steal credentials and payment details.

Startups are helping modernize America’s defense industry with new technology and innovative ideas as the War Department diversifies its inventory.

New account fraud victims jumped 31% in 2025, reaching 5.4 million. Criminals open accounts you may never see on your regular bank statements.

Flytrex says its AI-powered Rooftop Dock system in Dallas-Fort Worth positions drones at restaurants before orders arrive, cutting delivery costs by 60%.

Samson Sky's Switchblade flying car secures $80 million from Dubai's Matin Group, but the redesigned hybrid-electric aircraft still needs more testing.

The Fox News AI Newsletter covers the latest artificial intelligence technology advancements, including the challenges and opportunities AI presents now and for the future.

CenterPoint Energy confirmed customer data was stolen, while a hacker claims 7.49 million records with partial Social Security numbers were taken.

The $59 Brick device promises to help curb phone addiction, but free iPhone and Android tools may already do the job. Here's what to try first.

Epsilon Data Management's "opportunity seeker" lists helped scammers target millions of older Americans, DOJ court filings reveal in detail.

HBO Max's verified Reddit account was hijacked to push 108 malicious ads using ClickFix, a technique that tricks victims into running dangerous commands.

Flash Shelton reveals how home security cameras and alarm systems can stop squatters before they claim tenant rights in your vacant property.

WIM-Z's AI dog training robot uses on-device processing to detect barking and dispense treats autonomously, with field trials showing up to 83% reduction.

Google's Threat Intelligence Group found PROMPTFLUX malware that uses Gemini to rewrite its own code every hour, raising urgent cybersecurity alarms.

Your VPN may quietly drop protection when switching between airport Wi-Fi and hotel Wi-Fi. Key settings like auto-connect and kill switch help.

A South Carolina caregiver allegedly gained power of attorney over a 75-year-old with Parkinson's, then transferred his home via quitclaim deed for $5.

Joby Aviation flew its eVTOL air taxi into DFW Airport's busy airspace as Texas launches Project Nexus, a three-year advanced air mobility program.

Federal prosecutors say criminals bought sponsored search ads mimicking real banks, capturing over 5,000 login credentials and draining accounts.

The Mercedes-Benz eActros 600 electric truck targets 621 miles per charge on a 28,000-mile round-the-world journey through over 30 countries.

A viral video shows roughly a dozen Coco Robotics delivery robots swarming a Chicago sidewalk near Lincoln Park, raising wheelchair access concerns.

NewTree Social founder Maddy O'Connor built a community events app to help people discover local gatherings, wellness events and run clubs nearby.

DoppelCart's 119,000 fake shopping domains steal credit card details at checkout, mimicking over 44,000 real brands with convincing cloned sites.

Hurricane charity scams use data brokers and people search sites to target victims before storms even hit, exploiting personal information..

The Fox News AI Newsletter covers the latest artificial intelligence technology advancements, including the challenges and opportunities AI presents now and for the future.