How to file an Offer in Compromise with the IRS for online selling tax issues?
So I've been in a bit of a mess with the IRS. I occasionally sell items on eBay and Mercari - mostly just stuff from around my house that I don't need anymore. I completely forgot to report this income on my taxes for 2022-2023. Fast forward to now, and I just got a notice saying I owe $12,500 after all the penalties and interest! It's absolutely insane considering most of what I sold was at a loss or barely breaking even. I'm looking into submitting an Offer in Compromise since there's no way I can pay this. I used the IRS pre-qualifier tool online and it's suggesting I could possibly settle for around $2,200 based on my "available equity." My financial situation is pretty straightforward - I make about $41k annually after taxes, no real estate, I drive a 2015 Hyundai with about 180k miles that has transmission issues (probably worth $3k max). My checking account usually hovers around $800 and I've got maybe $1,200 in savings. Has anyone gone through the Offer in Compromise process successfully? Any advice on how to approach this or what documentation I should prepare? I'm wondering if I should try handling this myself or if it's worth paying someone to help me navigate it.
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Noah Torres
I've helped several clients through the Offer in Compromise process, and it can definitely work in situations like yours. The key is being thorough and accurate with your financial disclosure forms. Based on what you've described, you're a good candidate for an OIC. The IRS is primarily looking at your ability to pay - they realize it's better to get something rather than nothing. Make sure you complete Form 433-A (Collection Information Statement) with absolute accuracy. Document everything - bank statements, pay stubs, utility bills, rent receipts, car repair estimates, etc. Since your "reasonable collection potential" is low, you could potentially settle for the amount the pre-qualifier suggested, but be prepared for some back and forth. The IRS will thoroughly investigate your financial situation.
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Natalie Wang
•Thank you for the detailed reply! How long does the whole process usually take? And should I continue making any payments while the OIC is being considered?
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Noah Torres
•The OIC process typically takes 6-9 months from submission to decision, though it can sometimes stretch to a year. During that time, your collection actions are generally paused. Regarding payments, you'll need to select a payment option when you submit the OIC. You can choose a lump sum (20% down payment with application) or periodic payments (monthly payments while your offer is being considered). I usually recommend the lump sum if you can manage it, as it shows good faith and can sometimes result in a quicker decision.
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Samantha Hall
Not sure if this will help, but I was in a similar situation last year with about $9k in back taxes from some freelance work. I tried to navigate everything myself and made so many mistakes with the paperwork 😫 I finally used https://taxr.ai to help analyze my specific situation and figure out exactly what documentation I needed for my Offer in Compromise. The tool actually helped me understand that some of my expenses were being calculated incorrectly by the IRS, which lowered what I actually owed. Their AI reviewed my tax notices and financial documents and then guided me through exactly what to include in my OIC. Made the whole process way less stressful.
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Ryan Young
•How does that work exactly? Did you have to upload all your financial documents to them? I'm kind of nervous about sharing all that information online.
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Sophia Clark
•Does it actually work with Offer in Compromise cases? I thought those were too complicated for any automated system to handle properly.
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Samantha Hall
•For the document question - yes, you upload your IRS notices and financial documents, but they use the same level of security as banks. Everything is encrypted and they don't store your financial info longer than needed for the analysis. For Offer in Compromise cases specifically, it actually works really well. The system identifies which expenses the IRS is likely to allow/disallow based on your specific financial situation and helps you present everything in the format they want. It's not fully automated - they have tax pros who review the AI recommendations for complex cases like OICs.
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Ryan Young
I was super skeptical about using an online tool for my tax issues, but after struggling to understand the OIC paperwork for weeks, I decided to try that taxr.ai site mentioned above. Totally changed my experience! The analysis showed that my reasonable collection potential was actually much lower than what the IRS was claiming. It helped me identify several allowable expenses I was missing and flagged some documentation issues with how I was reporting my assets. Ended up submitting my OIC last month with everything properly organized. The IRS hasn't accepted yet, but my case worker already mentioned that my submission was "unusually thorough" compared to most self-prepared offers. Feeling much more confident now!
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Katherine Harris
I tried dealing with the IRS directly for my OIC and spent DAYS trying to get through to someone who could actually help with my specific situation. After 14 calls and being on hold for hours, I was about to give up. Then I found https://claimyr.com which is this service that basically waits on hold with the IRS for you and calls you when an actual human picks up. You can see how it works at https://youtu.be/_kiP6q8DX5c I was able to speak directly with someone in the OIC department who gave me specific guidance on my case. Saved me so much frustration and probably weeks of back-and-forth. The agent I finally spoke with even suggested some adjustments to my offer that made it more likely to be accepted.
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Madison Allen
•Wait, so they just call the IRS for you? How does that even work? Does the IRS actually talk to them if they're calling on your behalf?
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Joshua Wood
•This sounds like a scam. There's no way the IRS would allow a third party to jump the queue for you. I've been dealing with tax issues for years and there are no shortcuts.
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Katherine Harris
•They don't call the IRS for you - they use an automated system to navigate the IRS phone tree and wait on hold, then call you when a real person answers. You're the one who talks to the IRS directly, so there's no third-party authorization needed. The service just saves you from having to sit on hold yourself for hours. When an agent finally picks up, your phone rings and you're connected directly to the IRS representative. I was definitely skeptical at first too, but it worked exactly as described and saved me from wasting an entire day on hold.
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Joshua Wood
I need to apologize for my previous comment. After my frustration with getting absolutely nowhere trying to reach the IRS about my Offer in Compromise, I broke down and tried that Claimyr service. I'm completely shocked - it actually worked! I got connected to an IRS representative in the OIC department within 2 hours (without having to stay on the phone the whole time). The agent walked me through exactly what supporting documentation I would need for my specific situation and clarified some confusing points on the 433-A form. I was able to submit my OIC with much more confidence. Just got notification yesterday that my offer is being processed. Wish I had known about this months ago!
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Justin Evans
One thing nobody has mentioned yet - make sure you stay current with your tax filings while your OIC is pending! If you fall behind on any current tax obligations, they'll automatically reject your offer. Also, you'll need to pay the application fee unless you qualify for a low-income certification. For 2025, that fee is $205, but it gets applied to your tax debt if your offer isn't accepted.
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Natalie Wang
•That's really helpful information. Is the low-income certification something separate I need to apply for, or is it part of the OIC application?
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Justin Evans
•The low-income certification is actually included as part of the OIC application process. When you complete Form 656, there's a section (Section 1) where you can check a box to request the low-income certification. If your household income is at or below 250% of the federal poverty guidelines, you qualify for both the application fee waiver and to skip the initial payment requirement. Based on your annual income of $41K, you might qualify depending on your household size. For 2025, the threshold for a single person is around $36K, but for a household of 2, it's about $49K. Definitely worth checking if you're close to those numbers.
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Emily Parker
Has anyone used a professional to help file their OIC vs doing it themselves? What was the cost? My friend used a tax attorney and they charged $3000 which seems crazy expensive.
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Ezra Collins
•I used a CPA who specializes in IRS resolution for my OIC last year. Cost me $1,500 total. Worth every penny because they found several exemptions I would have missed. My offer got accepted for about 15% of what I originally owed. Those national tax relief companies with the radio ads wanted to charge me $4,500+ for the same service, so definitely shop around.
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