What Happens If You Opt for Offer in Compromise?

If you qualify for an OIC and meet the IRS criteria, our veteran tax specialists, enrolled agents, and tax attorneys will contact the IRS on your behalf to negotiate the best OIC settlement. As the negotiations usually center on your living expenses, monthly income, valuation of your assets, and potential future income, be prepared to disclose your full financial information to the IRS. You may be required to provide supporting documents to verify expenses and income claimed.

For most individuals, there is an application fee for requesting an IRS Offer in Compromise, which is not refundable and is not to be confused with a down payment. However, there are exceptions. There are no application fees for those requesting an OIC based on doubt as to liability and there is a fee exception for individuals who quality for a low-income exception. Our tax professionals will advise you on the exact application fee you may need to pay based on your unique situation.

Do note that the process can take anywhere from three to six months from the time of submission. In some cases, an OIC settlement may take up to a year to conclude. Once your proposal is accepted by the IRS, you have approximately five to 12 months to pay the settlement amount.

If your proposal is accepted by the IRS, there are two payment options: in a lump sum cash offer or in a periodic payment offer. Despite its name, a lump sum offer doesn’t mean you must only pay your full amount at once, though you could do so. Instead, a lump sum offer can allow you to pay in up to 5 or fewer installments within 5 or fewer months of your offer’s acceptance. A periodic payment offer is when you set up an agreement to pay your offer amount in regular monthly payments, similar to how you might with an installment agreement, that take place over the period of six to 12 months. As with many other types of IRS payment agreements, there are multiple ways to pay your offer amount, such as through credit card or through direct debit from your bank account.