Austin Tax Blog


If you are struggling to make tax payments, tax authorities may take legal action. One of the IRS’s many options is filing a Notice of Federal Tax Lien (NFTL) against you which will freeze any bank accounts or assets that have not already been seized by the government. This could potentially put your family in serious financial jeopardy if it goes on for years and damages your credit score as well. Additionally, after being notified about an NFTL filed against them, people often panic without knowing how they can resolve tax debt problems fast before their situation gets worse.

What is an Offer in Compromise (OIC)?

The Offer In Compromise program offers taxpayers who owe more than $25,000 through tax returns different pathways to settling their tax debts with the help of qualified professionals.

How does the IRS decide if you qualify for an OIC or not and what are their criteria for qualification.

If you owe tax debt and are unable to pay it off in full, the IRS may agree to reduce or even waive your tax liability. For them to consider a tax settlement agreement through an Offer In Compromise program, the following criteria must be met:

– The total tax due is more than $25,000

How much money can I save with an OIC compared to other debt-relief options like bankruptcy, debt settlement, or traditional repayment plans?

The tax settlement program allows you to negotiate a reduced tax liability, which could be as low as zero. In some cases, the IRS may even agree not to levy your assets or garnish your wages. If they do accept an OIC offer from you it is because this option will save them money since it relieves them of having to collect.

When should I consider filing for bankruptcy instead of using an Offer in Compromise?

An Offer In Compromise is not the only option for tax settlement if you have tax debt. You may also file a bankruptcy claim with the IRS, in which the tax authorities can bargain with creditors and secure a lower tax obligation that might be satisfied in court.

What kind of documentation do I need before submitting my application to the IRS for review.

The tax debt settlement program requires you to submit documentation that proves your tax liability is beyond the limits of what you can currently pay. You also have to provide information about your financial status, including copies of tax returns for the past few years along with any other financial documents that support your request for a reduced tax obligation.

How long does it take for tax authorities to review your application?

Most tax debt cases are completed within six months after the Offer In Compromise program is submitted. Once tax settlement negotiations begin, the IRS may extend this period up to 12 months or even longer depending on how complicated each case can be and if you have any additional tax liabilities.


If you’re considering using an Offer in Compromise to get out of debt, it’s important that you understand the process and what your potential savings could be. Our team at Escobar & Associates can help answer any questions about this option for getting out of debt so don’t hesitate to reach out!

Need Help?