The IRS settles debts every day — by formula, not mercy. Here's the reasonable-collection-potential math, the process, and how to know in ten minutes whether an offer is your answer or a payment plan is.
An offer in compromise (doubt as to collectibility) is arithmetic wearing a legal costume: the IRS computes your reasonable collection potential — what it could realistically get from your equity and future income before the collection statute expires — and accepts offers at or above it. The IRS pre-qualifier tool runs the math for free. If your RCP is high, an installment agreement is the honest answer; if it is low (thin assets, modest income, big balance), an OIC can legitimately settle for a fraction of the debt.
Ten minutes tells you whether the math works at all — before any fees, forms or hopes.
Form 433-A(OIC) wants bank statements, pay stubs, asset values. Gaps and optimism are the top rejection causes.
Application fee and initial payment (waived for low-income) travel with the offer; stay filing-compliant throughout.
6-12 months typical. Answer information requests fast; a rejected offer can be appealed within 30 days — and appeals regularly improve outcomes.
Every notice page explains the deadline and drafts the response letter free — find yours.
Look up your IRS notice →The IRS formula, not negotiation folklore, decides: reasonable collection potential = net equity in assets + monthly disposable income × 12 (lump-sum offers) or × 24 (periodic). If your number is below what the IRS could collect over the remaining statute, an offer near that figure is credible.
Roughly a third of offers are accepted overall — but acceptance follows the math, not luck. Offers computed honestly from the formula with complete documentation succeed; 'pennies on the dollar' marketing numbers without the financials behind them are what gets rejected.
Generally yes — levies pause while a processable offer is pending. The collection statute is also extended by the pendency period, which is part of the price.
The forms (656, 433-A(OIC)) are self-serviceable, and the pre-qualifier tool is free. Competent local EAs/CPAs charge a fraction of national 'tax relief' operations. Anyone promising acceptance before seeing your financials is selling, not advising.
The one that counts is the IRS's own Pre-Qualifier tool — it runs the reasonable-collection-potential math for free. Every honest third-party calculator computes the same formula: net equity in assets + monthly disposable income × 12 (lump-sum) or × 24 (periodic). This page walks that exact math step by step.