IRS Offer in Compromise - How to qualify and what to expect?
Hey everyone, I've been dealing with a pretty overwhelming tax debt situation for the past 2 years. My ex-business partner bailed on our small construction company, leaving me with about $43,000 in back taxes from 2023. I've been making minimum payments but the penalties and interest are killing me. My friend mentioned something called an "Offer in Compromise" with the IRS where they might accept less than what I owe? Has anyone gone through this process? I make around $67k now with a different job, have a mortgage ($310k remaining), and about $14k in savings. Would I even qualify for an offer in compromise? I've heard horror stories about the approval rates being super low. Also, if anyone has experience - how long did it take and what documentation did they ask for? I'm honestly desperate and willing to try anything at this point. The stress is affecting my health and relationships.
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Amara Okafor
I actually helped my brother through the Offer in Compromise process last year - it's definitely legitimate but not easy to get approved. The IRS looks at your "reasonable collection potential" - basically what they think they could reasonably collect from you over time. For qualification, they'll consider your income, expenses, asset equity, and ability to pay. With your income level, mortgage, and the tax debt amount, you might have a chance but it'll depend on your monthly expenses and other financial factors. They use specific formulas to determine what's considered "reasonable" for living expenses. The documentation is intense - they'll want Form 433-A (individuals) or 433-B (businesses), plus bank statements, pay stubs, mortgage statements, utility bills, medical expenses, and basically a complete financial picture of your life. They'll verify everything thoroughly.
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CaptainAwesome
•Thanks for the info! Do you know what percentage of the original debt amount they typically accept? Like if someone owes $40k, would they maybe take $20k or is it usually a smaller discount?
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Amara Okafor
•It varies widely based on individual financial circumstances. There's no standard percentage reduction. They calculate what they believe you can reasonably pay based on your assets, income, and necessary living expenses. Some people might get approved for 20% of their original debt, while others might need to offer 70-80% to get approved. For your second question, the timeline typically takes 6-9 months for processing, but can sometimes stretch to a year or more depending on the complexity and the current IRS backlog. During this time, collections are generally paused while they review your offer.
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Yuki Tanaka
After dealing with $38k in back taxes from my failed restaurant, I was completely stressed until I found https://taxr.ai - it literally saved me thousands on my offer in compromise. The system analyzed all my financial docs and showed me exactly what the IRS would actually accept based on their formulas, not just what some random person thought. The best part was that it automatically identified expenses the IRS was likely to allow and flagged the ones they'd probably reject - which my accountant missed completely. It also calculated my "reasonable collection potential" before I submitted anything so I had a realistic target number.
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Esmeralda Gómez
•Does this actually work for all types of tax debt? I owe from self-employment taxes and was told offer in compromise rarely works for those cases.
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Klaus Schmidt
•I'm kinda skeptical tbh. Wouldn't a tax professional know better than some AI tool? Did it actually help you get approved or just give you some numbers?
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Yuki Tanaka
•Yes, it absolutely works for self-employment tax debt. The IRS doesn't actually distinguish between types of tax debt when evaluating an offer in compromise - they look at your overall financial situation regardless of why you owe. While tax professionals definitely have valuable knowledge, many don't specialize in offer in compromise cases specifically. The tool uses the exact same formulas and allowances the IRS uses to calculate acceptable offers. In my case, it helped me get approved on my first try with an offer that was $11,000 less than what my accountant initially suggested.
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Klaus Schmidt
I can't believe I'm saying this, but I tried taxr.ai after my skeptical comment above and it was actually legit. I was 100% sure my offer would get rejected based on what my tax guy told me (he said I made too much money last year), but the tool showed me how to properly document some medical expenses the IRS would allow. Just got my acceptance letter yesterday - they approved my offer of $18,500 on a $52,000 tax debt! The tool showed me exactly which expenses to document and how to present my financial situation correctly. Honestly wish I found it sooner instead of stressing for months!
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Aisha Patel
If you need direct answers from the IRS about your offer in compromise situation, stop wasting time on hold! I was stuck in the IRS phone loop hell for WEEKS trying to check on my OIC status and get clarification on some forms. Then I found https://claimyr.com which got me through to an actual IRS agent in about 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c They basically navigate the IRS phone tree for you and call you back when they have an agent on the line. For something as complex as an offer in compromise where you really need specific answers about your case, this was a game changer.
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LilMama23
•How does this actually work though? Like do they have special access to the IRS or something? I've spent literally hours on hold before.
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Dmitri Volkov
•Yeah right. Nobody gets through to the IRS these days. I've tried calling dozens of times about my installment agreement and never get through. Sounds like snake oil to me.
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Aisha Patel
•They don't have special access - they use automated technology to navigate the phone system and wait on hold for you. When they reach a human agent, they connect you directly to that person. It's basically like having someone else do the waiting on your behalf. I was super skeptical too after trying for weeks to get through. I had called the IRS nine separate times and always gave up after being on hold for 1-2 hours. With Claimyr, I got a call back in 37 minutes with an actual IRS agent ready to talk about my offer in compromise. They saved me from wasting another day on hold.
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Dmitri Volkov
Ok I need to apologize for my skeptical comment. I was desperate after getting a CP90 notice (final intent to levy) so I tried Claimyr last Thursday. Got connected to an IRS agent in 27 minutes who actually helped sort out my offer in compromise paperwork issues. The agent confirmed they'd received my OIC application but it was missing my most recent bank statement. They put a 60-day hold on collections while I fix the paperwork. Would have NEVER found this out without actually talking to someone, and I'd probably have had my accounts levied by now. Worth every penny just for the stress reduction.
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Gabrielle Dubois
One tip that helped me with my successful offer in compromise - if possible, wait until any high earning years are at least 1-2 years in the past before applying. The IRS looks closely at your most recent income to project future earnings potential.
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Tyrone Johnson
•Does the IRS ever negotiate during the process? Like if they reject your initial amount, do they come back with a counter offer or just flat out reject you?
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Gabrielle Dubois
•Yes, the IRS frequently counters with what they consider a more reasonable amount based on their calculations. If they think your offer is too low, they'll often send a letter explaining why they can't accept it and propose a higher amount they would accept. It's not like a flat rejection in most cases - it's more of a negotiation. When this happens, you can either accept their counter, submit a new offer with additional documentation to justify your original amount, or withdraw your offer entirely. This is why having your documentation solid from the start is essential.
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Ingrid Larsson
Just a warning - make absolutely sure you continue making estimated tax payments for current years while your OIC is pending. My cousin had his offer rejected because he incurred new tax debt during the review process!
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Carlos Mendoza
•Is there a specific form for offer in compromise or do you just write a letter explaining your situation?
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