How to Know if You’re Eligible for an Offer in Compromise With the IRS

How to Know if You’re Eligible for an Offer in Compromise With the IRS
  • Opening Intro -

    If you owe money to the IRS, you may wonder if you are eligible for an Offer in Compromise.

    This is a question that many taxpayers ask, and it can be difficult to know the answer.


According to the IRS, an Offer in Compromise is an agreement between a taxpayer and the IRS that settle the taxpayer’s tax liabilities for less than the full amount owed. The main goal of this is to reach a compromise that is beneficial to both the taxpayer and the IRS.

A taxpayer must meet several eligibility requirements to qualify for an Offer in Compromise. Here are a few of the requirements and some information about eligibility.


To qualify for an Offer in Compromise, the IRS first requires that you are eligible to be taxed. If you are not taxable, you cannot receive a tax refund as an offer in compromise.

This is one of the most common reasons why taxpayers must adjust their tax returns at least once every four years. If you can’t qualify for an Offer in Compromise, paying your debt on time and avoiding penalties is the only option.

According to a tax lawyer, many people are unaware they are not taxable and end up paying more taxes than they actually owe.

Eligible to File an Offer in Compromise

For the IRS to be interested in your Offer in Compromise, you must be eligible for the offer. That does not necessarily mean you must meet all the requirements to qualify for an offer.

Your financial hardships are more important than any of your assets or items included in your offer. However, you may not actually receive an offer if your financial hardships place you below the required income threshold.

If you’re able to prove that the amount might be incorrect, you won’t be able to pay the amount required, or if you can pay the amount but it would result in financial hardship, you might qualify for the Offer in Compromise.

Reasonable Basis for the Offer

The IRS will not accept just any offer. They want to see that you have a reasonable basis for the offer and that you are not trying to take advantage of the system.

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They must be cautious and selective, so people won’t avoid paying their taxes because they know they’ll be able to have it written off in the long run.

A reasonable basis is usually based on your ability to pay, your current financial situation, and your ability to get a better offer in the future. This can also include if you can provide reasonable evidence that the amount you’ve been charged is incorrect, as previously mentioned.

Obviously, it wouldn’t be reasonable to expect you to pay taxes that you shouldn’t have been held liable for in the first place.

It can offer a clean slate for the taxpayer to set them up for compliance in the future, but not everyone qualifies. If you are unsure about your eligibility for an Offer in Compromise, it is best to speak with a tax professional.

They can help you determine if you meet the requirements and whether or not an Offer in Compromise is the best option.

Remember, an Offer in Compromise is not always the right choice for everyone. You should carefully consider your options before making a decision and be aware that it is the exception, not the rule, if you do qualify.

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