You’ve seen the ads: “Settle your tax debt for pennies on the dollar!” It sounds too good to be true—and for many, it is. But the IRS does offer a real program that allows eligible taxpayers to reduce what they owe. It’s called the Offer in Compromise (OIC).
At Back Tax Rescue, we’ve helped many clients across Gwinnett County use this program to resolve their tax debt. However, it’s not for everyone, and the application process can be complex. In this guide, we’ll walk you through everything you need to know before applying for an Offer in Compromise—and help you decide if it’s the right move for your situation.
💼 What Is an Offer in Compromise?
An Offer in Compromise is an agreement between a taxpayer and the IRS that settles a tax debt for less than the full amount owed. It’s designed for people who genuinely can’t afford to pay their full tax liability due to financial hardship.
There are three types of OICs:
- Doubt as to Collectibility: The most common. You can’t afford to pay the full debt based on your income, expenses, and assets.
- Doubt as to Liability: You believe the IRS incorrectly assessed or calculated your debt.
- Effective Tax Administration: You technically can pay, but doing so would create an unfair economic hardship or be inequitable.
👥 Who Qualifies for an Offer in Compromise?
The IRS doesn’t accept everyone—and approval depends on strict financial standards.
To qualify, the IRS evaluates your:
- Monthly income
- Living expenses
- Assets and equity (home, car, savings, investments)
- Future earning potential
Using these factors, the IRS determines your Reasonable Collection Potential (RCP)—what they believe they can realistically collect from you. If your offer is equal to or greater than your RCP, they may accept it.
You’re more likely to qualify if:
- You’re unemployed, underemployed, or on fixed income
- You have little or no assets or home equity
- You’re facing medical or family hardship
- Your expenses significantly outweigh your income
📄 How the Offer in Compromise Process Works
Here’s what the process typically looks like:
- You complete IRS Form 656 and Form 433-A (OIC) – these detail your finances in full.
- You submit your offer – including an application fee and initial payment (unless you qualify for low-income status).
- IRS reviews your offer – this can take 6 to 12 months. During this time, collection actions may be paused.
- They may accept, reject, or request more information.
- If accepted, you must stick to the payment terms and file all future tax returns on time for the next 5 years.
✅ Pro Tip: Many rejections happen due to missing documentation or unrealistic offers. Working with a tax resolution expert drastically improves your approval odds.
⚠️ Common Misconceptions About the OIC Program
Let’s clear up a few common myths:
- “Everyone qualifies” – False. The IRS is selective and only accepts offers when your financials prove you can’t pay more.
- “You can offer any amount” – Not true. The IRS will calculate your RCP and compare it to your offer. Lowballing often leads to denial.
- “Once accepted, it’s over immediately” – Not quite. You must remain compliant for 5 years, or your offer can be revoked.
✅ Pros and Cons of Filing an Offer in Compromise
Pros:
- Settle your IRS debt for less than you owe
- Stop collection actions while your offer is reviewed
- Peace of mind and a path to a fresh start
Cons:
- Long and complex approval process
- Must disclose full financial information
- Rejection is possible without proper guidance
🔄 What If You Don’t Qualify?
If the OIC isn’t right for you, the IRS offers several other relief options:
- Installment Agreement – Pay over time with manageable monthly payments
- Partial Payment Plan – A payment agreement that doesn’t require full repayment
- Currently Not Collectible (CNC) – Temporarily halt collections if you’re unable to pay
- Penalty Abatement – Reduce or eliminate penalties for reasonable cause or first-time offenses
👨💼 Why Work With Back Tax Rescue?
Filing an Offer in Compromise involves more than just filling out forms. The IRS scrutinizes every detail—and even small mistakes can cost you the chance at approval. At Back Tax Rescue, we:
- Analyze your financials and determine if an OIC is your best option
- Help you prepare a complete, accurate, and compelling application
- Communicate with the IRS on your behalf
- Explore alternative options if the OIC isn’t right for your situation
We’ve worked with clients throughout Gwinnett County and beyond to successfully reduce overwhelming tax debt—and we’re ready to help you too.
📞 Ready to Explore Your IRS Settlement Options?
An Offer in Compromise can offer real relief, but it must be done right. If you’re ready to find out if you qualify, we’re here to help.
📞 Call Back Tax Rescue: 470-699-1187
📧 Email: info@backtaxrescue.com
🗓️ Book Your Free Consultation Now »
Let’s see if you can settle your IRS tax debt for less—and finally move forward without the weight of tax stress on your shoulders.
