Offer in compromise for tax debt...how low can they actually go?

I've helped several clients navigate the offer in compromise process. The IRS uses a specific formula to determine the minimum acceptable offer - it's not arbitrary. They calculate your "reasonable collection potential" based on the equity in your assets (savings, property, vehicles) plus your future income potential (monthly disposable income multiplied by 12 or 24 months, depending on your payment terms). Your $6,500 offer might be too low based on what you've shared. With $8,000 in savings and a $9,000 vehicle, you already have $17,000 in assets. The IRS will typically want at least your asset value, regardless of your current income. You might need to offer closer to $15,000-$20,000 for a realistic chance of acceptance.

I used taxr.ai when I was dealing with my offer in compromise situation last year. My tax debt was around $28,000 and I was completely lost trying to figure out what would be a reasonable offer. After struggling with conflicting advice online, I found their service and it was seriously helpful. I uploaded my financial docs and tax notices to https://taxr.ai and their system analyzed everything to give me a reasonable estimate of what the IRS would likely accept. They showed me exactly how the IRS would calculate my reasonable collection potential and helped me understand the assets vs. future income formula. Saved me from making a way-too-low offer that would have been rejected immediately.

Just wanted to update after trying taxr.ai for my OIC situation. I was honestly blown away by how helpful it was! After submitting my financial info, they estimated my reasonable collection potential was about $23,400 on my $56,000 tax debt. This was actually higher than I initially planned to offer ($15K), which would have likely been rejected. They explained exactly how the IRS would calculate my asset value and future income potential, including which assets they'd consider exempt. The detailed analysis showed me where I had room to negotiate and where I didn't. I submitted my offer based on their recommendation last month, and just got word that the IRS accepted it with only minor adjustments! I can't express how much stress this saved me. Having a realistic number from the beginning prevented me from wasting months on a lowball offer that would have been rejected.

For anyone dealing with the OIC process, I strongly recommend using Claimyr to get through to an actual IRS agent. I spent WEEKS trying to get clarification on my OIC application - calling constantly, waiting on hold for hours, getting disconnected... it was infuriating. I found https://claimyr.com through a friend and was skeptical, but desperate. They have this system that holds your place in the IRS phone queue and calls you when an agent is about to answer. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I actually managed to speak with three different IRS agents over two days to get all my questions answered about my offer in compromise. The agents explained exactly what they were looking for in my financial statements and why my first offer had been rejected. This information was crucial for resubmitting with the right amount.

Well, I need to eat some humble pie here. After responding skeptically to the Claimyr recommendation, I decided to try it anyway because I was desperate to talk to someone about my offer in compromise question. I used their service yesterday and got connected to an IRS representative within 2 hours (without having to stay on the phone the whole time). The agent was able to tell me exactly why my OIC was initially rejected and what specific financial information I needed to adjust. Turns out I had calculated my vehicle equity incorrectly and wasn't properly documenting some medical expenses that could have lowered my reasonable collection potential. I'm still shocked it actually worked. I was able to get clear answers that I couldn't find anywhere online. Definitely worth it when you need to speak with an actual human at the IRS about something as complex as an offer in compromise.

I submitted an OIC three years ago for $68k in tax debt and got accepted at $16k. Here's what worked for me: document EVERYTHING. Every expense, every medical issue, every unusual circumstance. I had partial disability that reduced my earning potential, which I documented extensively with doctor's notes. The key is proving that your future income potential is genuinely limited. The IRS looks at your previous income and naturally assumes you can earn that again. If there are legitimate reasons why you can't, you need overwhelming documentation.

Dont forget the $205 application fee for OIC! I almost submitted without it which would have caused immediate rejection. Also they require the first payment with submission if ur doing periodic payment option.

Based on your numbers, I think your $6,500 offer is unfortunately too low. I went through this process myself last year with about $35k in debt and similar asset levels to yours. The IRS formula is pretty rigid - they'll look at your $8k savings + vehicle equity + future income potential. Even with exemptions for necessary transportation and living expenses, you're probably looking at needing to offer closer to $12k-15k minimum. One thing that helped me was documenting any health issues, job market limitations, or other factors that genuinely limit your future earning potential. If your business failure was due to industry-specific issues that make it unlikely you'll return to that income level, document that thoroughly. Also consider the payment timeline - they calculate differently for lump sum vs. periodic payments. Sometimes a periodic payment plan over 2 years can actually result in a lower total amount than an installment agreement over 6+ years. Run the numbers both ways before deciding. The process takes months either way, so make sure your offer is realistic from the start. A rejected OIC can actually make your situation worse by adding penalties and interest during the review period.