What is an offer in compromise, and do I qualify?
Short answer: An offer in compromise settles tax debt for less than the full amount when the IRS agrees you cannot pay it all. Most applicants do not qualify, so screen first.
An offer in compromise (Form 656) asks the IRS to accept less than the full balance. The IRS looks at your reasonable collection potential: equity in assets plus what you can pay from future income after allowable living expenses.
If that figure is less than what you owe, an offer may work. If it is more, the IRS will usually reject the offer and expect a payment plan.
Before applying you must have filed all required returns and be current on estimated payments or withholding. The application has a fee and a required initial payment unless you meet the low-income waiver.
Companies that promise pennies on the dollar to everyone are a red flag. We run the numbers first and tell you plainly whether an offer is realistic.
General information from Davis Schuler & Associates, LLC, not advice for your situation. Tax rules and thresholds change; confirm the current rules before acting.
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