Will my high credit card limits impact my IRS Offer in Compromise (OIC) application?

The IRS definitely looks at your available credit when reviewing an OIC application, but it's not as straightforward as just the limits themselves. When you file an OIC, the IRS evaluates your "reasonable collection potential" - basically what they think they could realistically collect from you over time. Available credit is viewed as a potential asset or resource you could use to pay your tax debt. If you have significant credit limits but carry high balances, the IRS might see less "available" credit. If you have high limits with low balances, they might question why you can't use some of that credit to pay your tax debt. They're primarily looking at your overall financial situation - income, expenses, assets, and liabilities.

I had a similar situation last year and found this amazing service called taxr.ai that really helped me understand how my assets (including credit lines) would impact my OIC. I was confused because I had about $30k in available credit across cards but also had medical debt, and wasn't sure how to present this properly on my application. I uploaded my financial statements to https://taxr.ai and their system analyzed everything and showed me exactly what the IRS would be looking at. It helped me prepare responses for potential questions about my credit availability during my OIC evaluation.

Just wanted to update that I tried taxr.ai after seeing it mentioned here and it was incredibly helpful for my OIC situation! I uploaded my credit card statements, bank records, and tax notices, and got a detailed analysis showing exactly how my available credit would impact my offer amount. The report even identified specific areas where the IRS would likely question my financial statement and gave me talking points to address those concerns. Saved me hours of back-and-forth with my attorney and probably helped me avoid an OIC rejection. Definitely worth checking out if you're in a similar spot.

If you're struggling with getting clear answers about your OIC, I'd recommend using Claimyr to actually speak with an IRS agent directly. I wasted weeks trying to get through to the IRS myself about my own Offer in Compromise questions. After trying for days and hanging on hold for hours, I found https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c. They got me a callback from an actual IRS agent within a day! The agent explained exactly how they view credit card limits during OIC evaluation and what documentation I needed to provide for my specific situation.

I have to admit I was completely wrong about Claimyr. After my skeptical comment, my OIC deadline was approaching and I was desperate for answers about how my retirement accounts would affect my application. Decided to try it as a last resort. Not only did I get a call back from an IRS agent within a few hours, but the agent was able to look up my specific case and tell me exactly what I needed to document about my credit accounts and assets. Saved me from making a huge mistake on my OIC application that would have likely caused a rejection. Would have spent way more fixing that problem than what the service cost.

As someone who went through this process, I'd recommend definitely mentioning all credit accounts on your 433-A form but also explaining your financial situation thoroughly. In my case, I had about $25k in credit limits but also explained that I was already using those cards for essential expenses and medical bills that weren't covered in the IRS allowable expenses. My OIC was accepted even with those credit limits.

Just a warning - be really careful about timing with OICs! The IRS looks at your financial situation at the time you submit, so if you're going to close credit accounts, do it well before filing (like several months). They'll be suspicious of any major financial changes right before submission. Also, they can see when accounts were closed on your credit report, so don't try to hide anything.

Speaking from experience as someone who successfully navigated an OIC with substantial credit limits - don't panic about the credit lines themselves, but be strategic about how you present them. I had about $35k in available credit when I filed, and my OIC was still accepted. The key is being completely transparent and showing that using that credit would create an unsustainable financial burden. When I filled out my Form 433-A, I not only listed all credit accounts but also included a detailed explanation of why maxing out those cards wasn't a viable solution - it would have pushed my monthly minimum payments beyond what I could afford with my current income, essentially trading one debt problem for another. I also documented that some of my available credit was already being used for essential expenses that weren't fully covered in the IRS's allowable expense standards. The IRS examiner did ask about my credit availability during the review process, but they seemed satisfied with my explanation that using it would create financial hardship rather than solve my tax problem. My advice: don't close accounts right before filing (looks suspicious), be completely honest about everything, and make sure your overall financial picture shows genuine hardship that wouldn't be solved by taking on more debt.

This is such valuable information from everyone who's been through the OIC process! I'm in a similar situation with about $42k in available credit limits and was losing sleep over whether to close some accounts before filing. Dylan's point about not closing accounts right before filing makes total sense - I can see how that would raise red flags. One question I haven't seen addressed: did anyone here have to provide bank statements showing credit card payments as part of their OIC documentation? I'm wondering if the IRS looks at your payment history to see if you've been making only minimum payments (which might support a hardship claim) or if you've been paying more than the minimums (which might suggest you have more available funds than claimed). Also, for those whose OICs were accepted - how long did the whole process take from submission to final approval? I know it varies, but trying to get a realistic timeline since my attorney mentioned it could take 6-12 months.

This thread has been incredibly helpful! I'm currently preparing my OIC application and was really worried about my $28k in available credit limits. Reading everyone's experiences has given me a much clearer picture of how to approach this. A few additional points that might help others in similar situations: My tax attorney emphasized that the IRS wants to see that you're not just trying to avoid paying what you legitimately owe, but that you genuinely cannot pay the full amount without creating severe financial hardship. Having high credit limits doesn't automatically disqualify you, but you need to demonstrate why using that credit isn't a reasonable solution. I'm also documenting that most of my available credit is already being used for essential expenses like medical bills and home repairs that aren't fully covered under IRS allowable expenses. This helps show that the "available" credit isn't really available for tax payments. One thing I'm curious about - has anyone dealt with business credit cards that were used for personal expenses during financial hardship? I have about $8k in business credit that I had to use for living expenses when my business income dropped, and I'm not sure how to present that in the OIC application.