The IRS offer in compromise program lets some taxpayers settle for less than they owe, but the rules are strict and the paperwork is unforgiving. Below are answers to questions we hear often from people weighing an OIC against other tax debt options. For a full breakdown of how the program works, see our Offer in Compromise guide.
Eligibility and Qualifications
Is an Offer in Compromise worth it?
It depends on your numbers. If your assets and future income genuinely cannot cover your full tax bill, a settlement can save you real money and close the case for good. If you could pay over time through an installment plan, the IRS usually expects that instead.
What is the IRS acceptance rate for an OIC?
The IRS accepts roughly 30 to 40 percent of offers submitted in a given year, though the figure moves from year to year. Most rejections happen because the offer amount was too low or the taxpayer was not yet eligible to apply.
Can self-employed taxpayers qualify?
Yes. Self-employed people can apply, but the IRS looks closely at business income, expenses, and any business assets along with personal finances. Inconsistent income can make the math harder, so accurate records matter even more.
Are retirement accounts counted as assets?
Generally, yes. The IRS typically counts the accessible equity in retirement accounts like a 401(k) or IRA as an asset, even if withdrawing early would trigger a penalty. This is one of the most commonly missed details in a self-prepared offer.
What is the Fresh Start Program?
Fresh Start is an umbrella term the IRS used for a set of changes that made the OIC program, installment agreements, and lien rules more flexible. It is not a separate application. People sometimes search for it expecting a distinct form, but it describes the current, more accessible version of these existing programs.
Costs and the Application Process
How much does professional help with an OIC typically cost?
Fees vary by firm and by how complex the case is, often ranging from a few hundred dollars for a simple consultation to several thousand for full representation through a contested case. Ask for a written fee breakdown before signing anything, and be wary of a flat guarantee quoted before anyone reviews your financial details.
Can I negotiate an Offer in Compromise with the IRS myself?
You are allowed to file your own offer. Nothing requires professional representation. That said, the formula the IRS uses is unforgiving of small errors, and a misjudged expense or asset value can sink an otherwise solid case.
What income and expenses does the IRS actually count?
The IRS uses its own national and local expense standards, not your actual budget. A gym membership, private school tuition, or a car payment above the IRS allowance usually will not count, even if it is a real monthly cost for your household.
What is the difference between an Offer in Compromise and an installment agreement?
An offer settles the debt for less than the full balance, often in a lump sum or a short series of payments. An installment agreement pays the full balance over time, usually with interest and penalties still accruing. The IRS generally expects you to use an installment plan unless your numbers show you truly cannot pay in full.
Can penalties and interest be included in the settlement?
Yes. An accepted OIC settles the entire tax liability, including the penalties and interest that built up on it, not just the original tax owed.
During and After the Review
What happens if my finances change while my offer is under review?
Tell your representative or the IRS examiner right away. A new job, an inheritance, or a major expense can change your reasonable collection potential, and the IRS expects updated information during a review that can stretch for many months.
Can I withdraw an Offer in Compromise after I submit it?
Yes, you can withdraw at any point before a final decision. Keep in mind that the application fee and any upfront payment are generally not refunded once the IRS has started processing the offer.
What is Form 13711, and how does an appeal work?
Form 13711 is the Request for Appeal of Offer in Compromise. If your offer is rejected, you have 30 days from the rejection letter to file it. An independent IRS Appeals officer, someone who did not work on your original case, reviews the decision.
Does an Offer in Compromise become part of the public record?
Accepted offers are included in a public inspection file the IRS maintains for a period of time, which can show your name and the general terms of the settlement. Offers that are withdrawn, rejected, or still pending are not made public.
Choosing the Right Help
How do I know if a tax relief company is legitimate?
Look for a written fee agreement, a named team handling your file, and a straight answer about your odds before you pay anything. Be cautious of a company that promises a specific settlement amount during a first call, since no honest provider can know that before reviewing your full financial picture.
Do states run their own Offer in Compromise programs?
Many do, including California, Ohio, and Massachusetts, but each state sets its own rules, forms, and minimum offer amounts. An IRS settlement does not cover state tax debt, so a taxpayer who owes both often needs two separate applications.
Can a tax relief company guarantee my offer will be accepted?
No legitimate company can guarantee an IRS decision. The outcome depends on your financial details and IRS standards, not on who files the paperwork. A provider who guarantees acceptance before reviewing your case is a warning sign, not a promise worth trusting.
What should I do if I already filed an offer on my own and it was rejected?
Gather the rejection letter, your original Form 433-A or 433-B, and any supporting documents you submitted. A tax professional can often identify what went wrong and advise whether an appeal, a corrected resubmission, or a different resolution option fits better.
Ready to find out where you stand? Call 800-676-6014 to talk through your case with our team.