Offer in Compromise

An Offer in Compromise (OIC) is an official IRS program that allows qualified taxpayers to resolve their outstanding tax liabilities for significantly less than what they originally owed. It serves as a financial lifeline for individuals and business owners facing overwhelming tax debt. If you are struggling with compounding penalties and interest, securing an approved Offer in Compromise can provide a fresh financial start by completely erasing your remaining tax balance.

Many taxpayers assume they must hire an expensive tax attorney or lawyer to submit this complex paperwork—but you don’t. At Total Tax Solutions, we handle the rigorous evaluation and negotiation process to give you the highest possible chance of IRS approval.

How Do You Qualify for an Offer in Compromise?

The IRS does not approve every application. To protect government revenue, they strictly evaluate your “Reasonable Collection Potential” (RCP). The IRS will only accept an Offer in Compromise if they determine that your total tax liability cannot be collected in full before the statutory collection period expires.

When reviewing your submission, the IRS looks at a specific set of financial criteria:
* **Ability to Pay:** Your current monthly disposable income after accounting for allowable living expenses.
* **Asset Equity:** The total net value of your liquid and non-liquid assets, including real estate, vehicles, and bank accounts.
* **Future Income Potential:** An algorithmic calculation predicting your earnings over the next several years.
* **Tax Compliance:** You must have filed all required historic tax returns and cannot be involved in an active open bankruptcy proceeding.

### The Two Payment Options Explained
If you meet the structural eligibility requirements, you must submit your Offer in Compromise using one of two specific payment tracks outlined by the IRS:

1. **Lump Sum Cash Offer:** This track requires a 20% down payment of your total offer amount along with your initial application. If accepted, the remaining 80% balance must be paid in five or fewer consecutive monthly installments.
2. **Periodic Payment Offer:** This option allows you to propose a monthly payment plan while the IRS evaluates your file. You must submit your first monthly installment with your application and continue making those exact payments while your offer is under review. If accepted, the balance is paid over 6 to 24 months.

### How Total Tax Solutions Builds a Winning Case
Submitting an Offer in Compromise requires an intense amount of financial disclosure. A single oversight can lead to an immediate rejection. Our experienced tax professionals maximize your chances of success through a strategic process:

* **Meticulous Financial Analysis:** We deep-dive into your financial profile to calculate your true Reasonable Collection Potential, ensuring we submit an offer amount that the IRS is statistically likely to accept.
* **Form 656 and 433-A Preparation:** We expertly draft and compile IRS Form 656 and the comprehensive Form 433-A (OIC) collection information statements, organizing your expenses to show maximum hardship.
* **Appeals Representation:** If an automated IRS reviewer unfairly rejects your initial offer, our team is fully prepared to take your case directly to the IRS Independent Office of Appeals to fight for your relief.

### Frequently Asked Questions About Settling Tax Debt

**How long does the IRS take to approve an Offer in Compromise?**
The IRS typically takes anywhere from 6 to 12 months to fully evaluate and process an offer. By law, if the IRS does not make a determination within 24 months of the submission date, the offer is automatically accepted.

**Can I apply for an offer if I am currently in bankruptcy?**
No. The IRS will immediately reject any Offer in Compromise if you have an open, active bankruptcy proceeding. All bankruptcy cases must be fully discharged or dismissed before you can apply for spousal or debt relief programs.

Settle Your Tax Debt Once and for All
Don’t let tax debt permanently stall your financial future. If you want to see if you qualify for an Offer in Compromise, contact Total Tax Solutions today for a comprehensive evaluation, and let our expert team help you settle with the IRS.