Austin Tax Blog


Find here, some of the IRS Offer in Compromise FAQs. These are general questions but one needs to take professional help to understand their individual case.


What is an Offer in Compromise? Please explain!

An Offer in Compromise is a method to save the debtor who cannot pay the federal taxes due to genuine reasons. In this method, one needs to make an OIC application to the IRS to make it clear that he/she cannot pay the tax debt. If the IRS approves it then they mutually agree to a settlement amount which is a part of the total debt amount that can be paid by the debtor. The IRS decides it in a way that it is equal to or more than what can be expected out of the debtor.

Can you tell me about the Offer in Compromise Qualifications?

Following are the ways in which a taxpayer matches the OIC qualification:

  • Doubt as to Collectibility
  • Doubt as to Liability
  • Effective Tax Administration

Which Forms Need to be Submitted for an Offer in Compromise?

Depending on your financial condition, you need to fill the following OIC forms:

  • Form 656–Offer in Compromise – The main form of application for requesting an OIC
  • Form 656–A – This should be filled only if you want to waive off the OIC processing fee
  • Form 433-A (OIC) – This gives details about your financial incompetence based on your income, liabilities, assets, and expenses. This needs to be filled by self-employed individuals or those falling under the low wage earning category
  • Form 433-B (OIC) – This is similar form as Form 433-A, but is specially designed for the business sector only.

A piece of advice is to get all the forms checked by an expert tax service provider to avoid any mistake on your end.

Do I Need a Tax Expert for the IRS OIC Process?

Most definitely yes! As tax service providers in Austin have expertise in resolving OIC issues, it is advisable to not experiment with the process and choose those with a lot of Offer in Compromise success stories to their credit. It not only saves you from OIC rejection but also helps you figure out the plan B to deal with the situation.

What is the Success Ratio of an OIC Application?

Well, IRS is quite strict with the tax payment issues and rejects around 60% of applications. As per the latest statistics, it has accepted only 42.8% of the offers. Therefore, find a tax expert that handles the application well and saves you from rejection.

How Long does Offer in Compromise Take?

Normally, the IRS takes around four to nine months to respond to an OIC application. If it is two years since you have applied then you can check with the IRS about the status. In case, the IRS has not responded within two years then the OIC application gets automatically approved.

What to do if my OIC Application Gets Rejected?

If the application gets rejected then you can an OIC appeal process. It happens due to various reasons and you need to figure them out and resolve them. It’s best to take help of a tax services expert.

Will it be Affordable to Choose a Tax Expert for the IRS OIC Process?

Well, it is certainly better to take assistance then get rejected. The fee can vary based on the complexity of your case. As the tax service providers in Austin help you save a big amount of payable amount, you can easily pay their fee in most cases.

What about the Tax Liens?

The IRS would release all of the tax liens after 30 days of payment verification.

To know more about Offer in Compromise and how it can be used in your favor, feel free to contact the team of tax experts at Escobar & Associates. You can give us a call on 512-442-3055, Monday to Friday 10:00 am – 4:00 pm or Contact US.