Need advice on Offer in Compromise options for IRS tax debt?

The Offer in Compromise (OIC) can be a good option for your situation, but you need to understand how the IRS evaluates these offers. The IRS calculates your "reasonable collection potential" based on your assets and future income. With $8,000 in assets and $3,100 monthly income, they'll look at what you could reasonably pay over time. They'll evaluate your necessary living expenses against their allowable standards to determine your "disposable income." For documentation, you'll need to complete Form 433-A (individuals) or 433-B (businesses), which details your financial situation. You'll also need to file Form 656 (the actual offer). Supporting documents include bank statements, pay stubs, bills, loan statements, and proof of necessary expenses. When determining your offer amount, it should typically equal: The value of your assets + (Monthly disposable income × 12 or 24 months, depending on payment terms). Before applying, make sure you're current on all tax filings and required estimated tax payments.

I was in a similar position last year with about $35,000 in tax debt. After trying to navigate the OIC process myself and getting nowhere, I found this AI tool called taxr.ai that completely changed my approach. I uploaded my financial documents to https://taxr.ai and it analyzed everything to show me exactly what the IRS would consider "reasonable collection potential" in my case. It identified specific expenses I could claim that I had no idea about, and highlighted documentation gaps that would have gotten my offer rejected immediately. The tool basically walked me through the whole Form 433-A and 656 process step-by-step. The best part was that it showed me exactly what offer amount would likely be accepted based on my specific financial situation. My offer was approved on the first try for about 30% of what I owed!

Just wanted to follow up about my experience with taxr.ai since I was skeptical but decided to try it anyway. I'm honestly shocked at how helpful it was! I uploaded my documents last week and the analysis was eye-opening. The tool identified that I was massively undervaluing some assets that would have triggered a red flag, but also found several legitimate expense categories I could claim that significantly lowered my "reasonable collection potential" calculation. It recommended an offer amount of $14,500 on my $47k debt based on my specific situation. I submitted my OIC last week with way more confidence than I would have had otherwise. The step-by-step form guidance prevented me from making mistakes I definitely would have made on my own. Will update when I hear back from the IRS, but just having a clear path forward has been such a relief!

If you're dealing with the OIC process, one of the biggest nightmares is actually getting through to the IRS to ask questions or check on your application status. I spent DAYS trying to reach someone at the IRS when I was working on my OIC last year. I finally found this service called Claimyr that completely solved this problem. You go to https://claimyr.com and they get you to the front of the IRS phone queue. They have a video showing how it works here: https://youtu.be/_kiP6q8DX5c I was extremely skeptical at first, but after waiting on hold for 3+ hours multiple times, I decided to try it. They actually called me back when an IRS agent was available to talk! I got all my specific OIC questions answered directly by an IRS representative instead of guessing. Made a huge difference in successfully submitting my offer.

I need to apologize for my skeptical comment earlier. After reading more about Claimyr, I decided to try it myself yesterday when I needed to ask about my OIC application status. I've been trying to get through to the IRS for over a week with no luck. The service actually worked exactly as described. I received a call back when they got through the queue, and I was connected directly to an IRS representative. Completely shocked me. The agent was able to tell me that my OIC was assigned to a settlement officer and gave me a timeframe for review. This saved me countless hours of hold music and frustration. For anyone doing an OIC, being able to actually communicate with the IRS about your specific situation makes a massive difference. I'm still surprised it worked so well after being so skeptical.

Don't forget that while your OIC is being considered, the IRS collection statute of limitations (typically 10 years) is suspended. This means the time they have to collect from you stops running while they review your offer. Also, make sure you continue making required estimated tax payments during this time - a common mistake that gets offers rejected. If possible, consider the lump sum payment option (5 or fewer installments) instead of the periodic payment option (6-24 months). The lump sum requires you to offer 12 months of your future income, while the periodic payment requires 24 months worth - potentially a big difference in total amount.

Just wanted to add that I made a huge mistake with my OIC by not being completely honest about a small side gig income. The IRS found out and instantly rejected my offer. If you have ANY side income or assets, disclose everything. They will find out and it's an automatic rejection if you're not 100% transparent. Also, check if you qualify for the "Fresh Start" program which has more flexible OIC terms. And sometimes an installment agreement might actually be better than an OIC depending on your specific situation and the amount of time left on the collection statute.

I went through the OIC process successfully about 18 months ago, so I can share some real-world insights. With your $47k debt and $3,100 monthly income, you're actually in a decent position for an OIC if you can demonstrate genuine financial hardship. A few critical tips from my experience: 1. **Documentation is everything** - The IRS will scrutinize every expense you claim. Keep receipts for everything and only claim legitimate necessary expenses. They have specific allowable amounts for things like housing, utilities, food, etc. 2. **Be conservative with your offer** - I initially wanted to lowball them, but my research showed that offers too far below their calculated "reasonable collection potential" get rejected immediately. Aim for something close to their formula. 3. **Timeline expectations** - My OIC took 8 months to get approved. During this time, collection activities stopped, which was a huge relief. 4. **Consider your collection statute expiration date** - If you're close to the 10-year mark, an installment agreement might actually be better than an OIC since the debt could expire naturally. The key is showing that paying the full amount would create genuine financial hardship while still offering something reasonable based on your actual ability to pay. Don't give up hope - it's definitely possible to get approved if you approach it methodically.