IRS Offer in Compromise: Minimum Requirements for Processing Your Application.

The IRS Offer in Compromise (OIC) program can be a powerful solution for taxpayers who are genuinely unable to pay their full tax debt.

However, before the IRS will even consider your offer, you must meet specific minimum requirements. Submitting an incomplete or ineligible package can result in automatic rejection and wasted time and money.

Below is an overview of what you must have in place before the IRS will process your offer:

You Must Have Filed All Required Tax Returns

Before you can submit an OIC, the IRS requires that you be fully compliant with your tax filing obligations.

All individual, business, and payroll tax returns must be filed.

If you have unfiled returns, the IRS will immediately return your offer without consideration.

You Must Have Made All Required Estimated Tax Payments

If you are self-employed or otherwise required to make estimated tax payments, you must be current.

For individual taxpayers: You must have made all estimated payments for the current tax year.

For business owners with employees: You must have made all federal tax deposits for the current quarter.

You Must Use the Correct Forms

To be considered, your offer package must include:

Form 656, Offer in Compromise – This is your formal proposal to settle your tax debt.

Form 433-A (OIC) for individuals or Form 433-B (OIC) for businesses – This provides a complete picture of your income, assets, expenses, and liabilities.

Application Fee – As of 2025, the fee is $205 unless you qualify for the Low-Income Certification.

Initial Payment – Either 20% of your offer amount (if proposing a lump-sum cash offer) or the first installment payment.

Any missing documentation or signatures will result in the IRS returning your offer without review.

You Cannot Be in an Open Bankruptcy

If you are currently in bankruptcy proceedings, the IRS is prohibited by law from processing an Offer in Compromise.

You must wait until your bankruptcy case has been resolved before applying.

Important Considerations Before You Submit

Even if you meet all minimum requirements, acceptance is not guaranteed. The IRS will carefully analyze:

Your ability to pay

Your income and expenses

The equity in your assets

Whether your offer represents the most they can reasonably expect to collect

Submitting an offer without proper evaluation can lead to denial and further collection action.

Get Professional Guidance Before You Apply

Determining whether you qualify for an Offer in Compromise and preparing a complete, accurate package requires experience and careful planning.

Martha De la Chaussee, former IRS Collection Revenue Officer with over 40 years of experience resolving tax collection and audit cases, can help you:

Evaluate whether you are a true candidate for an OIC

Ensure all IRS requirements are satisfied before submission

Negotiate the most favorable resolution possible

Call 323-344-2294 today for a free 30-minute confidential consultation.

Learn more at: taxandbusinesszone.online.com