Offer in Compromise — When Settlement Actually Makes Sense

The IRS advertises Offer in Compromise as a way to settle tax debt for "pennies on the dollar."

What they don't advertise: the rejection rate is over 60%.

Most applications fail because taxpayers don't understand what the IRS is actually evaluating. The program isn't about negotiation or hardship stories. It's a mathematical calculation of your ability to pay based on income, assets, and future earning capacity.

If the numbers don't work, the application doesn't work.

We figure out if you qualify before you waste time and money on an application that's going to get rejected.

Get an OIC Qualification Analysis

Talk to an Enrolled Agent | No obligation | Find out if settlement is realistic

What the IRS Actually Evaluates

What the IRS Actually Evaluates

The IRS doesn't care about your hardship story or how the debt happened. They focus on these four key financial factors.

Reasonable Collection Potential (RCP)

Can the IRS collect more by keeping you on a payment plan than they'd get from an OIC settlement? If yes, they will reject your offer.

Your Asset Equity

Includes real estate, vehicles, retirement accounts, and business assets. The IRS calculates quick-sale value, not what you hope to sell them for.

Your Disposable Income

This is what's left after IRS-allowed expenses — not your actual expenses, but what the IRS permits based on national and local standards.

Your Future Earning Capacity

The IRS projects your ability to earn for the next 12-24 months. Temporary unemployment with strong earning potential is factored in.

When We Do Recommend Representation

Your information is 100% secure and confidential. | No Obligation

What the IRS Actually Evaluates

When OIC Actually Works

  • Income is permanently reduced

    Your earning capacity has permanently declined due to age, disability, or market changes.

  • Assets have minimal equity

    Your house is underwater, retirement accounts are protected, and you don't own valuable property.

  • Allowed expenses consume income

    After IRS standard deductions, there's minimal disposable income left for tax payments.

  • Collection statute is expiring

    The IRS may accept a lower settlement rather than lose collection authority entirely.

  • You're judgment-proof

    Low income and minimal assets mean the IRS calculates they'll collect little to nothing.

When OIC Doesn't Work

  • You have significant asset equity

    The IRS will expect you to liquidate or borrow against assets before accepting a settlement.

  • Income is temporarily reduced

    The IRS factors in future earning potential and will wait for your income to recover.

  • You can afford a payment plan

    If the IRS calculates you can pay the balance over time, they will reject the OIC.

  • You're not compliant

    Unfiled returns or not being current on estimated tax payments leads to automatic rejection.

  • You're hiding assets or income

    The IRS investigates and will reject your application, leading to additional scrutiny.

IRS Offer in Compromise Evaluation

How We Evaluate Your Situation

1

Financial analysis first

We calculate your reasonable collection potential using IRS formulas. If the numbers don't support settlement, we tell you directly.

2

Asset review

We examine equity, exemptions, and liquidation requirements to explore alternatives if liquidation doesn't make sense for you.

3

Income projection

We assess whether your current income is permanent or temporary, because the IRS projects forward.

4

Compliance check

OIC isn't an option until all returns are filed and you're current on estimated payments. We ensure compliance is established first.

If OIC Makes Sense, Here's How We Build the Case

Complete financial documentation

We gather bank statements, asset valuations, and income/expense verification. Incomplete applications get rejected.

IRS-allowed expense calculation

We use IRS Collection Financial Standards, not your actual expenses, to determine your monthly disposable income.

Reasonable collection potential analysis

We calculate what the IRS can realistically collect and structure an offer that makes sense for both sides.

Offer structure

Lump sum offers often get better treatment. We determine which structure maximizes your probability of acceptance.

Alternatives to OIC

If you don't qualify, other options may work better:

Monthly payments over time. More taxpayers qualify for payment plans than settlement.

The IRS suspends collection because you have no ability to pay. Debt remains but enforcement stops.

Removing penalties reduces your balance without requiring settlement of the underlying tax.

Monthly payments that won't pay the full balance before the collection statute expires.

Tax Consultation Section

Start with a Qualification Analysis

Before you pursue Offer in Compromise, find out if you actually qualify. We'll review your financial position, calculate your reasonable collection potential, and tell you whether OIC is realistic or whether another strategy makes more sense.

Speak directly with a licensed Enrolled Agent who can evaluate your eligibility. Confidential. No obligation. No sales pitch.

Disclaimer

Disclaimer

OIC acceptance depends on your specific financial situation and IRS review. Approval is not guaranteed. Most applications are rejected. We provide honest assessment of your qualification before recommending you pursue this option.

Contact us.

📧 info@simonsgroup.net
📞 (202) 495-1404

📍 Serving all of New York — NYC, Brooklyn, Buffalo, Rochester, Albany, and surrounding areas