An Offer in Compromise (OIC) is an agreement with the IRS to settle a tax debt for less than the full balance. The IRS generally accepts an offer when it equals the most it could realistically collect from you, which it calls your reasonable collection potential. Tax Flow Resolution builds and negotiates offers using 17 years of experience inside the IRS.
An Offer in Compromise is a formal settlement agreement between you and the IRS. Once accepted and paid, the rest of the tax, penalties and interest covered by the offer is forgiven. The program exists because the IRS would rather collect what is realistically possible now than chase a balance that will never be paid.
The IRS can accept an offer on three grounds:
Before the IRS will consider an offer, you generally must:
Qualifying is not the same as being accepted. The deciding factor is the math behind your reasonable collection potential (RCP): the net equity in your assets plus your future disposable income, calculated using IRS Collection Financial Standards for allowable living expenses. If your offer is at or above your RCP, it has a real chance. If it is below, it will usually be rejected, no matter how hard your situation is.
An Offer Examiner does not decide whether your story is sympathetic. They check whether your offer matches the RCP worksheet. Offers are rejected every day because they are built on the wrong numbers. We build the file the way the examiner will review it, including documentation for every allowable expense and every asset valuation, so there are fewer surprises and fewer rounds of back-and-forth.
The IRS formula has two parts:
Small details move this number a lot: how a vehicle is valued, which expenses the IRS allows, how irregular self-employment income is averaged, or whether an asset is actually reachable. This is where most self-prepared offers fail and where experience inside the IRS matters.
“I owed the IRS over $85,000 and was terrified. Israel didn't just help me settle for a fraction — he made me feel like a human being through the whole process. I finally sleep at night.”Michael R., Offer in Compromise — NJ
Israel spent 17 years inside the IRS: a decade as a Revenue Agent conducting examinations and seven years as an Appeals Officer resolving disputes. He is an Enrolled Agent, federally licensed to represent taxpayers before the IRS. He personally handles every case, and also supports CPAs and tax firms on IRS exams and appeals.
This page is for general information and is not legal or tax advice for your specific situation. IRS rules, thresholds and fees change. Results depend on the facts of each case. Contact us for advice about your situation.
The IRS generally accepts an amount equal to your reasonable collection potential: the net equity in your assets plus your future disposable income over 12 months (lump-sum offer) or 24 months (periodic-payment offer). There is no fixed percentage. The right number depends entirely on your finances.
Many offers take roughly 6 to 12 months or more, depending on complexity and IRS workload. By law, if the IRS does not make a decision within 24 months of receiving the offer, the offer is deemed accepted.
Generally no. The IRS is prohibited from levying while an offer is pending, for 30 days after a rejection, and while a timely appeal is under review. A federal tax lien may still be filed, and interest continues to accrue.
No. The IRS will return the offer if required returns are missing. We can help you get compliant first, then file the offer.
The IRS charges a $205 application fee plus an initial payment (20% of the offer for a lump-sum offer, or the first monthly payment for a periodic offer). Both are waived if you meet the IRS low-income certification guidelines.
You can generally appeal the rejection to the IRS Independent Office of Appeals within 30 days of the rejection letter. Israel Ostrov served as an IRS Appeals Officer for seven years and personally handles OIC appeals.
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