The Truth About IRS Offer in Compromise Settlements—Cutting through the media hype

by Paul R. Tom Myths and FAQs, Taxes and the IRS, Zeiders Law Firm Blog

I’m sure that everyone reading this has heard on radio or seen on TV the advertisements in which the 1-800 tax settlement companies boast about getting very favorable IRS Offer in Compromise settlements for their clients.  I’m sure the statements are entirely true, but they are also misleading.  The 1-800 company suggests that since the smiling couple in the TV ad settled their tax debt for two cents on the dollar, you will be able to settle your debt for the same percentage amount. Unfortunately, it doesn’t work that way.

Every Offer in Compromise is different.  IRS’s determination whether to accept, modify or reject an Offer in Compromise will be based on the specific facts and circumstances presented by the taxpayers submitting the Offer.  If the smiling couple in the TV ad owes more than their home is worth, has no savings, owes thousands in state income tax and student loans, and has only Social Security for income, it doesn’t really matter how much they owe IRS.  They will be able to settle their IRS tax debt for a very small fraction of what they owe.  However, if you are a young healthy single person with no dependents earning $125,000 a year, with $20,000 equity in your home, a 401(k) worth $50,000 and you owe IRS less than $50,000, you’re not going to get an Offer in Compromise settlement for any amount.

I have negotiated dozens of Offers in Compromise in my 30+ years of tax practice and I have an excellent record (>90%) getting Offers in Compromise approved.  I negotiated an Offer in Compromise recently where IRS settled a $500,000+ tax debt for less than $5,400, but I can’t tell another taxpayer that I can get him/her the same deal.  Despite what the 1-800 companies suggest in their ads, that’s not the way it works.  What I can and do tell my Offer in Compromise clients is that I will submit the lowest offer I can based on the taxpayer’s income, assets, health, age and other circumstances, and I will use my 30+ years’ experience to get the Offer in Compromise approved.  That’s the real truth about Offers in Compromise.

If you’d like to discuss an Offer in Compromise or other tax issue with an experienced tax professional, contact me for a free initial consultation.  Email me at or call me at (918) 743-2000.  I look forward to meeting with you soon.