An Offer in Compromise is a federal tax program that allows taxpayers to enter into an agreement with the IRS to settle their tax debt for less than the amount they owe. This agreement is an option when taxpayers can’t pay their full tax liabilities or when paying the entire balance owed would cause financial hardship. The goal is a compromise that suits the best interests of both parties.
The IRS considers various circumstances when reviewing OIC applications, including the applicant’s:
- Income
- Expenses
- Asset equity
There is also an application to apply for an OIC. Taxpayers who meet the definition of a low-income taxpayer don’t have to pay this fee.
This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov8
Footnotes and Sources
- IRS.gov, May 22, 2025
