Offer in Compromise - How much can I realistically offer when I've got almost nothing to pay the IRS?

I've helped several clients through the Offer in Compromise process. The basic concept is pretty straightforward - the IRS will accept less than the full amount if you can prove you can't reasonably pay it all. The amount you'll need to offer depends on two main things: your "reasonable collection potential" (what the IRS calculates you could pay) and your asset equity. The formula is basically: (Monthly disposable income × 12 or 24 months) + equity in assets. The IRS looks at your current income, expenses, and assets to determine this. Since your income dropped dramatically after 2019, that works in your favor. The IRS generally looks at your current situation, not what you earned years ago. You'll need to complete Form 433-A (individual) and Form 656 (the actual offer). Be completely honest about your finances - they verify everything.

After struggling with a similar tax situation, I found this AI tool that helped me figure out exactly what I could offer for my OIC. It's called taxr.ai (https://taxr.ai) and it analyzes your financial situation to calculate what the IRS would likely accept. I was in a similar boat - had a great year, then income dropped dramatically, and I owed about $30K. The tool helped me understand exactly what docs I needed, how to fill out the 433-A correctly, and gave me a realistic range for my offer. The best part was it showed me which expenses the IRS would allow and which they'd probably reject.

I was really skeptical about taxr.ai at first, but after my OIC was rejected twice when I did it myself, I decided to give it a shot. The difference was night and day. The tool identified several issues with how I had been calculating my reasonable collection potential. For one, I had been using my actual expenses rather than the IRS allowable standards (big mistake). Second, I hadn't properly documented my hardship. The tool generated a complete financial analysis that showed exactly why I couldn't pay the full amount, calculated what I could reasonably offer, and even helped with the hardship letter. My offer was accepted about 8 weeks after submission. Saved me about $42K on a $50K tax debt. Worth every penny considering how much I was about to pay in installments over the next several years.

If you're struggling to reach the IRS about your Offer in Compromise, try Claimyr (https://claimyr.com). I spent WEEKS trying to get through to the IRS OIC department with no luck - constant disconnects and hours on hold. Claimyr got me connected to a real IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. I was able to ask specific questions about my OIC application before submitting, which probably saved me from rejection. The agent explained several mistakes in my draft application that would have gotten it thrown out immediately.

I need to apologize and confirm that Claimyr actually works. After my skeptical comment, I was desperate enough to try it when my OIC was at risk of being dismissed for lack of response. I had been trying to reach the IRS for THREE WEEKS with no success. Used Claimyr out of pure frustration, and I was talking to an actual IRS agent within 35 minutes. The agent gave me a direct extension for follow-up questions and helped me understand exactly what additional documentation I needed to submit. Just saved my OIC from automatic rejection due to a looming deadline. I'm still shocked it worked, but it absolutely did. Definitely worth it when you're dealing with time-sensitive IRS issues.

One thing nobody mentioned yet - make sure you're actually a good candidate for an OIC before spending time on it. The IRS rejects about 60% of offers. If you have significant income or assets, or if the IRS believes you can pay through an installment agreement, they'll likely reject your offer. In 2019, the average accepted offer was about 20% of the original tax debt, but that varies dramatically case by case. Some get accepted for much less, others for more.

Make sure to consider the Non-Collectible status option before going straight to an OIC. If you truly have no ability to pay, you can apply for Currently Not Collectible status which pauses collection activities. The debt doesn't go away, but it buys you time. And remember, most tax debts expire after 10 years from assessment date (the Collection Statute Expiration Date or CSED). Sometimes waiting it out makes more sense than an OIC.