What You Are Dealing with
An Offer in Compromise is real, but it is not a universal discount program. A weak application can consume months and nonrefundable payments without changing the underlying account. The valuable service is learning whether the facts support an offer before committing to the process.
What the IRS Is Doing
The IRS evaluates ability to pay, income, necessary expenses, and asset equity. Most offers are considered under doubt as to collectibility and generally must meet or exceed Reasonable Collection Potential. Other grounds address genuine doubt about the liability or narrow effective-tax-administration circumstances. Filing and current-payment compliance are threshold requirements, and an open bankruptcy generally prevents eligibility.
What We Do
We test the case before packaging it. We confirm compliance, reconcile the debt, review assets and income, apply the allowable-expense framework, and compare the resulting collection potential with other payment paths. If an offer is supportable, we prepare the financial disclosure and application. If it is not, we say so and explain the better route.
How an Offer Compares to the Other Payment Paths
| Path | What it is | Who it fits | The tradeoff |
|---|---|---|---|
| Offer in Compromise | Settle for less than the full balance when the documented facts support it | Taxpayers the IRS calculates cannot pay in full within the collection window | Months of review; application payments may be nonrefundable; the collection clock extends |
| Installment agreement | Pay the full balance over time in monthly amounts | Taxpayers with steady income who can pay in full over the term | Penalties and interest keep accruing until the balance clears |
| Currently Not Collectible | The IRS pauses active collection while hardship lasts | Taxpayers whose allowable expenses leave nothing to collect | The debt and any lien stay; the IRS reviews the account and can revisit |
| Full payment | Pay the balance and close the account | Anyone with the funds available | No discount — but penalties and interest stop immediately |
How the Written Engagement Starts
- Send the balance notices and a complete list of tax periods and entities involved.
- We confirm that required returns and current payments or deposits are addressed.
- We review income, expenses, assets, liabilities, and supporting records.
- You receive a written qualification assessment, proposed scope, and fee before an application is prepared.
What to Gather
- IRS account notices and current transcripts
- Recent bank, investment, retirement, loan, and property records
- Income records and documentation of necessary household or business expenses
- Proof of current estimated payments or federal tax deposits when applicable
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Frequently Asked Questions
- The common route is when the IRS calculates that the full liability cannot be collected within the collection period. The calculation focuses on income, allowable expenses, assets, liabilities, and ability to pay.
- Yes. The IRS requires all required returns and current estimated payments to be addressed. Employers must also satisfy current federal tax-deposit requirements described by the IRS.
- No. The IRS directs taxpayers to consider other payment options, and a person who can pay through an installment agreement or other means generally will not qualify under the common collectibility route.
- While the IRS evaluates a processable offer, other collection activity is generally suspended, although the IRS may file a notice of federal tax lien. The collection period is also extended, so the tradeoff must be understood before filing.