Tax Relief AnswersIRS Offer in Compromise: Who Qualifies and What It Costs
The short answer
An Offer in Compromise (OIC) is an agreement in which the IRS accepts less than the full balance because it concludes it cannot collect the full amount. As of October 2026, applying costs a $205 fee plus a first payment unless your income is at or below the chart in Form 656-B, and in fiscal year 2025 the IRS accepted 5,464 of the 38,797 offers it received, a 14.1% acceptance rate, per the IRS Data Book. The rules are on the IRS Offer in Compromise page.
Who can apply
The IRS will not consider an offer until you meet four conditions listed on its page: all required tax returns are filed, required estimated tax payments for the current year are made, you are not in an open bankruptcy, and, if you have employees, federal tax deposits are current for the current and last two quarters. The IRS also publishes a free Pre-Qualifier tool that checks these points and estimates an offer amount from your income, expenses and assets.
Most people who owe do not fit an offer. The IRS compares what you offer with what it could collect from your income and property over the remaining collection period. If a monthly payment plan would pay the balance in time, the offer is usually rejected.
What it costs, as of October 2026
| Item | Value |
|---|---|
| Application fee | $205. The IRS says that if you apply and are not eligible, it returns your application and the fee; it is not returned if the offer is rejected |
| Lump-sum offer | 20% of the offer amount sent with the application; the rest in 5 or fewer payments after acceptance |
| Periodic payment offer | First payment sent with the application; monthly payments continue during review until the offer is paid |
| Low-income certification | No fee, no first payment, no payments during review. Income at or below the Form 656-B chart: 1 person $39,900; 2 $54,100; 3 $68,300; 4 $82,500; each additional person $14,200 (Alaska and Hawaii higher) |
| Decision deadline | An offer is automatically accepted if the IRS does not accept or reject it within 2 years of receiving it |
| If rejected | Payments made are applied to your balance; you can appeal to the IRS Independent Office of Appeals |
Acceptance rates by fiscal year, from FY2019 to FY2025, are on our IRS collection statistics page. The average accepted offer in FY2025 was $17,962.
Steps
- Run the IRS Pre-Qualifier. It tells you whether the four conditions are met and gives a preliminary offer amount.
- File every missing return and make any estimated payment that is due. An offer sent before this is returned, not reviewed.
- Individuals can submit the application in their IRS Individual Account, per the IRS page. Businesses and individuals without an account use Form 656 and the financial statement (Form 433-A (OIC) for individuals) from the Form 656-B booklet. List every account, vehicle and income source; the IRS verifies them.
- Choose lump sum or periodic payment, and send the $205 fee and the first payment, or the signed low-income certification instead.
- Keep making the periodic payments and keep filing on time while the IRS reviews. Missing either can end the offer.
- If the IRS rejects the offer, appeal by the date printed on the rejection letter.
What an offer does not do
- It does not pause the 10-year collection clock in your favor. The clock stops while the IRS reviews the offer, and 30 days are added after a rejection. See the 10-year limit.
- It does not release a filed federal tax lien until the offer amount is paid in full.
- It does not refund the fee or the payments if the offer is rejected; the payments are applied to what you owe.
- It does not end with acceptance. You must meet every term in Section 7 of Form 656, including filing and paying on time afterward, or the IRS can reinstate the original balance.
- It is not private. Some information about accepted offers is available in the IRS public inspection file.
Anyone you pay to prepare an offer files the same Form 656 you can file yourself, and the IRS decision rests on the same financial figures. If you want help, the people who can represent you before the IRS are enrolled agents, CPAs and attorneys, and a Low Income Taxpayer Clinic does this for free or for a small fee for people whose income is under 250% of the poverty guidelines.
FAQ
How much does the IRS accept on an Offer in Compromise?
There is no fixed percentage. The IRS accepts an offer when the amount equals or exceeds what it could collect from your income and assets over the remaining collection period. In fiscal year 2025 the average accepted offer was $17,962, per the IRS Data Book.
What percentage of offers does the IRS accept?
In fiscal year 2025 the IRS accepted 14.1% of offers received, 5,464 of 38,797. In fiscal year 2023 the rate was 42.1%. The full series is on our data page.
Does the IRS stop collection while it reviews an offer?
The IRS says it suspends most collection activities during review. Interest keeps accruing, and the 10-year collection period is paused for the review time plus 30 days if the offer is rejected.
Can I apply for an Offer in Compromise if I have not filed all my returns?
No. The IRS lists filed returns and current estimated payments as conditions, and it returns offers that do not meet them without reviewing them.