Tax Settlement Services: IRS Offer in Compromise

A tax debt settlement with the IRS is filed on Form 656 with a detailed financial statement (Form 433-A or 433-B) that documents every asset, source of income, and allowable monthly expense. The IRS uses that packet to calculate your Reasonable Collection Potential, then compares it to the amount you offered. If your offer is at or above that number, the IRS has a formula-based reason to accept.

You choose how to pay an accepted offer: a lump sum (20 percent down, then the balance in five or fewer payments) or a periodic payment plan spread over the remaining months of the collection statute. The IRS charges a $205 application fee and requires the initial payment up front, though low-income applicants can qualify for a waiver of both.

The IRS takes many months to review an Offer in Compromise, and while it is under review the collection statute is paused. We handle every piece of correspondence during that window so a missed IRS request does not sink an otherwise-approvable offer.

Before the IRS will even consider an offer, you have to be current: all required tax returns filed, current-year estimated payments or withholding on track, and not in an open bankruptcy. Those are gate conditions, not the decision itself.

The decision itself is the reasonable collection potential math. The IRS adds the equity in your assets to your future monthly income (after subtracting allowable living expenses under the National and Local Standards), multiplied out over the offer term. If that number is less than the full balance, an Offer in Compromise is realistic. If it is not, a different program will serve you better, and pushing an offer that the formula does not support just wastes the application fee and months of review.

We run this calculation during the investigation phase, before you commit to an offer. You see the number the IRS will see, so there are no surprises when the packet is submitted.

Tax settlement is one of the most heavily advertised corners of the tax industry, and the pitch sounds the same from firm to firm. Three things separate the ones worth calling, and all three are verifiable before you sign anything.

Credentials come first. Only Enrolled Agents, CPAs, and attorneys can represent you before the IRS, and the person who actually works your case should hold one of those credentials rather than being the salesperson who answered the phone. Accreditation comes second. Reviews come third, and the number that matters is the full public count, not the three quotes on a homepage.

Innovative Tax Relief holds an A+ rating with the Better Business Bureau and a 5.0 average across 367 verified Google reviews. Our fees are based on the services required and the complexity of the case, never on a percentage of what the IRS accepts, and they are explained in full before you move forward.