Offer in Compromise (OIC): Who Qualifies and How the IRS Evaluates Your Offer
- bdjfinancials
- Jun 12
- 1 min read
An Offer in Compromise (OIC) is a program that may allow you to settle IRS tax debt for less than the full amount—but only when the numbers support it.
What an Offer in Compromise is
An OIC is a formal settlement request. The IRS reviews your income, expenses, assets, and ability to pay to determine whether your offer reflects your ‘reasonable collection potential.’
The 3 main OIC grounds
Doubt as to collectibility (you can’t pay the full amount)
Doubt as to liability (you dispute the amount owed)
Effective tax administration (exceptional circumstances)
Common reasons OICs get rejected
Unfiled tax returns
Offer amount doesn’t match financial reality
Missing documentation
Expenses not supported or not allowed
What to do before applying
Make sure you’re compliant (filed returns) and understand what the IRS will count as income and allowable expenses. Submitting an unrealistic offer can waste time and fees.
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