Can I pursue an Offer-in-Compromise for my deceased father's IRS debt?

I'm really sorry about your father. This is definitely a challenging situation, but there are options to consider with an Offer-in-Compromise (OIC). Since you're dealing with an estate, you'd file what's called a "Doubt as to Collectibility" OIC. This is where you demonstrate to the IRS that the estate can't reasonably pay the full tax debt. The condition of the properties would absolutely be relevant here. First, you'll need to file Form 656-L specifically for the estate (not yourself personally). The IRS will look at the estate's assets and their actual condition - not just theoretical market values. Take detailed photos of all the damage to both the mobile home and land, get estimates for repairs, and document everything thoroughly. For the land, get a professional appraisal that accounts for any issues (access problems, environmental concerns, etc.). The IRS typically accepts offers that represent the "reasonable collection potential" - which in a case like this might be significantly less than the assessed value.

I went through something really similar with my uncle's estate last year. The tax debt was overwhelming and I was completely lost until I found https://taxr.ai - it saved me so much stress! Their AI analyzed all his old tax documents and helped identify exactly which years needed what kind of documentation. The best part was uploading pictures of the property condition and getting a professional assessment report that showed the true value of the assets. They created a complete OIC package that outlined exactly what the estate could reasonably pay based on the condition of everything. Their template letters explaining the addiction issues were compassionate but factual. I ended up settling a $75k tax debt for around $18k by offering the vacant land my uncle owned. Without their guidance on how to document everything properly, I'm sure the IRS would have rejected it.

I have to come back and admit I was completely wrong about taxr.ai. After my initial skepticism, I decided to try it for my mother's estate tax issues, and the results were incredible. The system guided me through documenting the poor condition of her house (which had similar issues to what OP described), and created a comprehensive asset valuation report that the IRS actually accepted. They even helped me draft the hardship narrative explaining my mom's health struggles that led to the tax situation. I was able to settle a $43,000 tax debt for just under $12,000 with their step-by-step OIC package. The documentation they helped me put together was far better than anything I could have done on my own. Actually submitting everything myself rather than paying an attorney saved thousands, and the IRS accepted our first offer!

If you're dealing with the IRS on an OIC, you're probably going to need to talk to them directly at some point. I wasted WEEKS trying to get through to an IRS representative about my father's estate tax issues. Kept getting disconnected or waiting on hold for hours. I finally discovered https://claimyr.com which was a complete game-changer. You can watch how it works here: https://youtu.be/_kiP6q8DX5c but basically they hold your place in the IRS phone queue and call you when an actual human picks up. For estate tax matters like this, you'll need to speak with someone in the right department. I managed to get connected with a specialist who walked me through exactly what documentation I needed for the OIC. That direct conversation saved me from submitting an incomplete application that would have been rejected.

I need to publicly admit I was completely wrong about Claimyr. After my skeptical comment, I was desperate to speak with the IRS about my sister's estate tax situation and decided to try it anyway. Holy crap, it actually worked exactly as advertised. I got a call back with an actual IRS agent on the line within a couple hours. The agent walked me through the specific documentation required for an estate OIC and even explained how they evaluate property in poor condition. They told me which specific forms to include and how to document the property issues. This direct conversation probably saved me from having my OIC rejected outright. For anyone dealing with estate tax issues, being able to actually speak with someone at the IRS who can answer your specific questions is invaluable. I'm seriously shocked at how well this worked after all my failed attempts to get through on my own.

One crucial thing to understand with OICs for estates is that the IRS is primarily concerned with the net proceeds the estate would receive if assets were sold. So for your situation: 1. Get a real estate agent to provide a formal opinion on the mobile home's value AS-IS, with all the damage and problems you described 2. For the vacant land, determine if there are any issues that would reduce value (access problems, zoning limitations, environmental issues) 3. Calculate any costs the estate would incur in selling these properties (realtor fees, closing costs, outstanding property taxes) 4. Subtract these costs from the as-is values This net figure is likely what the IRS will consider as the estate's ability to pay. I've seen OICs accepted for much less than face value when properties have significant issues.

I'm a little confused by some of the advice here. My understanding is that with a deceased person's tax debt, the IRS can only collect from the estate, not from the heirs personally. So if the estate doesn't have enough assets to cover the debt, couldn't you just let the IRS take whatever's there and be done with it? Why go through the OIC process at all?

This is such a difficult situation, and I'm sorry for your loss. One thing that hasn't been mentioned yet is the timing aspect - you mentioned filing for probate before discovering the tax debt. This actually creates some urgency because once probate is open, creditors (including the IRS) have a specific timeframe to file claims against the estate. The IRS typically has one year from the date they receive notice of the death to assess additional taxes, but they can also file claims during the probate process. Since you've already filed the missing returns, they now have all the information they need. Given the condition of the properties you described, I'd strongly recommend getting professional photographs and written estimates for cleanup/repair costs ASAP. Document everything - the pest infestation, structural damage, utility issues, etc. This evidence will be crucial whether you pursue an OIC or the IRS just takes what's available. Also consider that even if you can't keep much from the estate, settling through an OIC might give you more control over the process and timing rather than having the IRS force liquidation of everything. The mobile home might actually have negative value once you factor in cleanup and disposal costs, which could work in your favor.