Offer in compromise
Washington, DC IRS offer in compromise.
Mr. Powell prepares offers in compromise and handles the collection matter around them. The IRS charges a $205 application fee for an offer in compromise, waived for taxpayers who certify low income.
The firm has an office at 1629 K Street NW, Suite 300 in Washington, DC and represents individuals and closely held businesses in IRS collection matters nationwide, including offers in compromise.
Each matter begins with the assessed balance, filing compliance, and the collection notice already in hand.
The offer procedures described on this page were checked on irs.gov on September 4, 2026. The notice in hand controls over this summary.
An offer settles a tax debt for less than the full amount.
The IRS describes an offer in compromise as a way to settle a tax debt for less than the full amount owed if the taxpayer qualifies. Eligibility depends on the account, required filings, and the IRS collection analysis. Most payment plans and relief options require that required tax returns are filed.
26 U.S.C. section 7122(f) sets an outside limit on how long the IRS may take. An offer the IRS has not rejected within 24 months of the date it was received is deemed accepted, not counting any period the liability is in dispute in court. The IRS states the same rule on its offer in compromise page, checked September 10, 2026. Track the receipt date on the file.
The offer itself is made on Form 656, and the offer amount comes from the Collection Information Statement, Form 433-A (OIC) or Form 433-B (OIC), which totals equity in assets and future remaining income under the IRS expense standards.
An offer is not a payment plan. An installment agreement pays the liability over time. A temporary delay of collection and penalty relief are separate paths. The IRS may accept, return, or reject an offer. See offer in compromise vs installment agreement for the full comparison. This page does not quote a settlement amount or predict a result.
Official source: IRS Offer in compromise
Official source: Get help with tax debt
Official source: Payment plans
Official source: 26 U.S.C. 7122
The work
Read the collection notice.
Read the collection notice
Identify the tax years, the assessed balance, and whether required returns are filed. Most collection alternatives require current filing compliance.
Reconcile the liability
Compare the IRS balance with filed returns, payments, credits, and any open examination or appeal before asking the IRS to compromise the debt.
Gather the financial record
An offer is evaluated against the IRS collection analysis. The forms and supporting records the IRS currently requires control what must be submitted.
File only if the program fits
The IRS may accept, return, or reject an offer. This page does not determine whether an offer is available in a particular matter.
Collection alternatives sit beside an offer.
A Collection Due Process hearing can consider collection alternatives, including an installment agreement or an offer in compromise, when the notice offers that hearing. Read IRS collections and IRS levy when the paper is a levy notice.
If years remain unfiled, start with unfiled tax returns. If the balance still depends on an examination, start with IRS audit defense.
For a Maryland resident, a Chapter 13 plan can also pay priority tax debt over time under court supervision; see Chapter 13 for IRS back taxes.
Official source: Collection Due Process FAQs
Official source: IRS Publication 594
Questions
Common questions.
What is an IRS offer in compromise?
An offer in compromise asks the IRS to settle an assessed tax debt for less than the full amount owed, under 26 U.S.C. section 7122. Eligibility turns on the account, the required filings, and the IRS collection analysis rather than on hardship alone. The application carries a $205 fee, waived for a taxpayer who certifies low income, per the IRS offer in compromise page checked September 4, 2026. The IRS may accept the offer, return it as incomplete, or reject it.
Does an offer in compromise require filed tax returns?
In practice, yes. Most payment plans and relief options, an offer included, require that the required tax returns are filed before the IRS will consider the request. Eligibility then depends on the account, the required filings, and the IRS collection analysis. Where years remain unfiled, those returns come first, and Internal Revenue Code section 6020(b) lets the IRS prepare a substitute return for a missing year in the meantime.
Is an offer in compromise the same as an installment agreement?
No. An installment agreement pays the assessed balance in full over time. An offer in compromise asks the IRS to accept less than the full balance. The government fees differ as well. An individual owing $50,000 or less in combined tax, penalties, and interest, with required returns filed, can set up a payment plan online, while an offer carries a $205 application fee plus an initial payment of 20 percent of a lump-sum offer or the first periodic payment. See the full comparison on offer in compromise vs installment agreement.
What happens after an offer is filed?
The IRS may return an incomplete offer, request more information, accept the offer, or reject it. A rejection letter states any appeal opportunity and prints the date that opportunity runs from. 26 U.S.C. section 7122(f) sets an outside limit. An offer the IRS has not rejected within 24 months of the date it was received is deemed accepted, not counting any period the liability is in dispute in court. The IRS states the same rule on its offer in compromise page, checked September 10, 2026. The receipt date on the file is the date that clock runs from.
Can a Collection Due Process hearing consider an offer in compromise?
Yes, when the notice carries hearing rights. A Collection Due Process hearing under 26 U.S.C. section 6330 can consider collection alternatives, including an installment agreement or an offer in compromise. The request is due within 30 days of a final notice of intent to levy such as LT11 or Letter 1058, and it is made on Form 12153. A timely levy hearing request generally suspends the levy actions at issue. A lien-filing hearing request does not by itself stop a levy.
What may follow an offer.
The IRS may return an incomplete offer, request more information, accept the offer, or reject it. A rejection letter states any appeal opportunity and the date that letter prints. Read that letter. Do not use this page to calculate an appeal deadline.
Related pages
Related offer in compromise resources.
- IRS collectionsReturn to the collections hub for liens, levies, payment plans, and hearing rights.
- Form 433-A (OIC) and 433-B (OIC)The Collection Information Statement that computes the minimum offer from equity in assets and future remaining income.
- IRS Form 656The offer form section by section, the payment terms, and why offers are returned.
- IRS levyA levy takes property to pay the tax. Hearing rights are a separate collections path.
- Unfiled tax returnsRequired returns generally must be filed before the IRS will consider an offer.
- Penalty reliefPenalty relief is a separate request from an offer in compromise.
- IRS AppealsA rejected offer may have an appeal path. Read the determination letter.
- IRS Letter CheckLook up the code printed on a supported IRS letter.
- Offer vs installment agreementSettle for less vs pay over time: eligibility, government fees, and when each fits.
- Alternatives to an offerPayment plans, partial pay, currently not collectible status, and penalty abatement.
Send the letter code and the date printed on it.
Tell me the balance shown on the IRS notice and whether required returns are filed. Send only a high-level summary.
Schedule an initial consultationRequesting a consultation does not make Mr. Powell your lawyer, provide legal advice, or protect a deadline.
Law Office of Alexander Powell, PLLC. 1629 K Street NW, Suite 300, Washington, DC 20006.