Offers in Compromise: I'll Tell You the Truth Before You Spend the Money
The TV ads make it sound easy. Settle your tax debt for a fraction of what you owe. The reality? The IRS rejects more OICs than they accept. The difference between acceptance and rejection is knowing the formula and presenting the case correctly. That's what 32 years teaches you.
The IRS Formula
The IRS calculates your 'reasonable collection potential.' It's your monthly disposable income multiplied by a factor, plus the equity in your assets. If your offer meets that number, they consider it. If it doesn't, they reject it. I run these numbers before we file anything.
Honest Assessment
Some firms will file an OIC for anyone who walks in the door. I won't. If the numbers don't work, I'll tell you. Then we find a strategy that does work — installment agreement, CNC status, or something else. Wasting $205 in application fees and six months of your life on a doomed OIC helps no one.
What Makes an OIC Succeed
Accurate financial documentation. Proper expense allowances. A well-written narrative explaining your circumstances. And a number that the IRS examiner can defend to their manager. I've filed hundreds of these. I know what examiners look for.
Timeline and Process
An OIC takes 6 to 12 months. During that time, the IRS pauses collection. I prepare the entire package, handle examiner questions, and negotiate if they counter. You focus on your life. I focus on the IRS.