Offer in Compromise

You have little equity, minimal monthly disposable income (income minus IRS allowable living expenses), and  no expectation of future income, you can pursue what is called an Offer in Compromise (OIC). An OIC will allow you to settle your IRS debt for less (sometimes significantly) than you owe.

The amount of your settlement offer is based on the information you submit with your specialized Collection Information Statement (CIS). The basic formula the IRS uses to determine your Offer amount is your net asset equity plus your monthly disposable income multiplied by either 12 or 24 months (depending on how fast you want to pay the offer).

Offer in Compromise Offer Example:

$75,000 IRS Balance

Equity:

• Home: Fair Market Value (FMV) of $410,000, multiplied by 80% (quick sale value used for OIC calculation) equals $328,000. Less mortgage balance of $320,000 equals $8,000 in home equity.
• Retirement Account:  FMV of $3,200, multiplied by 80% equals $2,560 in retirement account equity.

Total Equity = $10,560

Monthly Disposable Income:

• Monthly Income: $4,000
• Monthly IRS Allowable Expenses: $3,900
• Remaining Monthly Income = $100

Total Future Income = Remaining Monthly Income ($100) multiplied by 12 months (or 24 months if you elect a longer term payment) equals $1,200

In this example you could settle your $75,000 tax debt for as little as $11,760 (total equity plus total future income).

Offer in Compromise Success:

Below are a few real examples of OICs that our attorneys have gotten approved for our clients:

IRS LIABILITY	ACCEPTED OFFER	TAXPAYER SAVINGS	PERCENT SAVED
$1,951,782	$105,690	$1,846,092	94.6%
$672,534	$500	$672,034	99.9%
$306,492	$27,130	$279,362	91.1%
$276,078	$12,400	$263,678	95.5%
$284,621	$25,000	$259,621	91.2%
$258,588	$2,287	$256,301	99.1%
$224,714	$288	$224,426	99.9%
$188,517	$16,290	$172,227	91.4%
$138,861	$19,166	$119,695	86.2%
$119,000	$10,600	$108,400	91.1%
$91,261	$15,830	$75,431	82.7%
$44,285	$773	$43,512	98.3%
$43,044	$8,095	$34,949	81.2%

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