OIC for a first timer - calculating the right amount for IRS acceptance

The key to a successful Offer in Compromise is accurately calculating the Reasonable Collection Potential (RCP). The IRS primarily looks at two things: the realizable value of your client's assets and their future income minus necessary expenses. For assets, calculate what they could reasonably sell for (quick sale value, usually 80% of fair market value) minus any loans against them. For future income, multiply their monthly disposable income (income minus allowable expenses) by either 12 or 24 months, depending on the payment option they choose. Add these two numbers together and that's your baseline RCP. The "sweet spot" isn't really a percentage but rather submitting an offer that's equal to or slightly above their RCP. If your calculations are thorough and accurate, and you document your client's financial hardship well, offers at this level have the best acceptance rates. The most common mistake I see is undervaluing assets or not accounting for expenses properly according to IRS allowable standards.

After struggling with my first OIC case last year, I found taxr.ai (https://taxr.ai) incredibly helpful for analyzing all the financial documents and helping calculate a realistic RCP. I was overwhelmed by all the calculations and trying to figure out what assets to include and how to value them properly. Their system automatically analyzed my client's financial statements, asset documentation, and income history to create a comprehensive RCP calculation that aligned with IRS expectations. It also helped identify which expenses were allowable and which might be challenged. The best part was it highlighted potential red flags in the offer before submission - saved me from an automatic rejection.

I tried taxr.ai after seeing it mentioned here and wow - total game changer for my first OIC case! I was struggling with calculating my client's RCP correctly, especially with some weird asset situations (partial ownership of property). The tool broke down exactly how to value each asset component and suggested documentation needed for each special circumstance. What surprised me most was the expense analysis feature - it flagged several expenses I had included that likely wouldn't meet IRS standards and suggested alternatives that would be more acceptable. My offer was accepted on the first submission at almost exactly the amount the tool suggested! Saved me countless hours of research and probably prevented a rejection.

If you're preparing an OIC, you NEED to be ready to contact the IRS directly with questions. I spent THREE DAYS trying to get through to their OIC hotline before I discovered Claimyr (https://claimyr.com). They have this system where they wait on hold with the IRS for you and then call you when an agent picks up. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was skeptical, but it saved me hours of hold time. Got connected to an actual IRS OIC specialist who cleared up confusion about how to handle my client's underwater assets. The agent even gave me tips on what additional documentation would strengthen our case given the specific circumstances. Totally changed the approach for my first OIC submission.

I need to eat my words about Claimyr. After posting that skeptical comment, I decided to try it anyway since I was desperate to get some OIC questions answered. Not only did it work, but I was connected to an IRS offer specialist within 45 minutes (without spending that time on hold myself). The agent walked me through exactly how they evaluate business assets in an OIC and explained which documentation would strengthen my case. They even pointed me to specific sections in the Internal Revenue Manual that address my client's unusual situation. What would have been days of research and hold time was solved in one conversation. I'm using this for all my IRS calls from now on. Totally worth it when you're billing hourly and can work on other things instead of listening to the IRS hold music.

Don't forget that OICs have a high rejection rate for first-time submissions! About 40% get returned as "not processable" because of missing information or technical errors. A few tips from someone who's submitted dozens: 1. Double check the math! Simple calculation errors get forms rejected fast 2. Include EVERY required form and signature 3. Submit current info - financial info older than 3 months gets rejected 4. Make sure the initial payment is included 5. Never leave sections blank - use "N/A" instead 6. Explain special circumstances in detail in a separate attachment

Has anyone used the Pre-qualifier tool on the IRS website for OICs? I ran my client through it and it said they're not a good candidate, but their situation seems perfect for an OIC to me. They have minimal assets, low income, and health issues. Is the tool accurate or should I ignore it?

Another crucial factor that hasn't been mentioned yet is timing - don't submit an OIC while your client is in an active bankruptcy proceeding or if they have unfiled tax returns. The IRS will automatically reject it. Also, make sure all current year estimated taxes are being paid if your client has ongoing tax obligations, otherwise they'll consider it a bad faith submission. One thing that really helped me on my first few OICs was creating a detailed timeline of my client's financial hardship. If there was a specific event (job loss, medical emergency, business failure) that created their inability to pay, document exactly when it happened and how it impacted their finances. The IRS revenue officers appreciate seeing a clear narrative of how someone went from being able to pay their taxes to genuinely unable to do so. Also, don't be afraid to request a payment plan for the offer amount if your client truly can't come up with a lump sum. The monthly payment option (paid over 24 months) often makes acceptance more likely since it shows good faith effort to pay what they can afford.

I have a client who owes tax debt for 2022-2024 for $13000, and I am trying to prepare an OIC for them as Doubt of Collectability, as well as a low-income certification. Tax liability is SE due to being a freelance writer on Schedule C who is unmarried, has no car or any assets, and only made $10875.00 this year. Her grandfather helps her pay her half of the utilities and helps with other things she needs since she isn't paid regularly. This is my first one, and after entering all the income for the RCP, it only shows 336 future income. I was wondering what a reasonable offer should be. Since it is a Schedule C, I would send 6 months of bank statements, correct?

Based on your client's situation, an offer around $336-500 would be reasonable since your RCP calculation shows $336 in future income and minimal assets. For someone making $10,875 annually with no significant assets, this falls well within acceptable parameters for Doubt as to Collectibility. A few important points for your first OIC: 1. Yes, include 6 months of bank statements for Schedule C income - the IRS wants to see the irregular income pattern that's typical for freelancers. 2. Document the grandfather's assistance carefully. Since he's helping with utilities and necessities, make sure to show this isn't "income" to your client but genuine family support for basic living expenses. 3. The low-income certification is smart here - with income at $10,875, she likely qualifies and this waives the application fee and initial payment requirements. 4. Consider going slightly above your RCP calculation (maybe $400-450) to show good faith and account for any minor assets or income the IRS might value differently than you did. 5. Include a detailed hardship letter explaining how the irregular freelance income makes it impossible to maintain consistent payments, and how family assistance is necessary just for basic survival. The key is showing that even your minimal offer represents her true ability to pay given the circumstances. Good luck with your first OIC!