What This Service Actually Does
- Asks the IRS to accept a proposed settlement under an available legal ground. A collectability offer examines what can reasonably be collected from assets and income.
- An effective-tax-administration offer addresses qualifying exceptional circumstances even where the debt may be collectible. A genuine liability dispute follows different procedures.
- If accepted, creates payment and compliance obligations. Filing an application alone does not settle the debt or automatically release an existing levy.
Why Someone Might Need It
- You cannot reasonably pay the full federal liability using available assets and an affordable payment arrangement.
- Full collection would produce qualifying hardship or exceptional circumstances that require a documented individual review.
- You need a settlement decision after carefully comparing realistic alternatives, government payments, private fees and the effect on the collection period.
What a Professional Might Charge
Selected published schedules include offers from $2,750 and higher-complexity work at $8,750 or more. Another reviewed provider gives an illustrative $3,500–$8,500 range.
Illustrative published fee examples, not a verified national average, required rate, legal price limit, or quote. The price depends on the work and the professional. Agency charges and taxes are separate.
Compare the Full Scope and CostWhat the Professional Fee May Include
- Financial and transcript analysis, an eligibility assessment, preparation of applicable offer forms and supporting evidence, and contact with the assigned offer examiner.
- Ask whether revised calculations, negotiations, special-circumstance explanations and follow-up requests are included through a final decision.
What It May Exclude
- Government application fees, proposed settlement payments, missing returns, bookkeeping, valuations, state offers, appeals and future-year compliance work unless specifically included.
- A promise that the IRS will accept a particular dollar amount or that the preliminary eligibility tool is an approval.
Can I Do This Myself?
You may prepare and submit your own offer. Use the IRS eligibility tools and current booklet before paying anyone. Asset valuation, allowable expenses, legal disputes and long-term compliance make this more demanding than a basic payment plan.
Documents and Information I Need
- Notices and account records for every tax period, proof of filed returns, current estimated payments and applicable payroll deposits.
- Income and benefit records, household expenses, bank and investment statements, real-estate and vehicle values, loan balances and business records.
- A realistic funding plan for the offer payments, details of any bankruptcy, pending examination or spouse-relief request, and evidence of exceptional circumstances if claimed.
Keep these records in your own secure files. This website does not require your tax documents to read or use the guide.
Step-by-Step Instructions
Verify the Amounts and Years Owed
Create a list of each assessed tax liability and tax period. Check payments and unresolved adjustments. An offer should not substitute for correcting a bill you believe is wrong.
Check Required Tax Returns
Confirm required personal and business returns are filed. A valid filing extension has separate rules and does not extend the time to pay. Follow the booklet if you were not required to file a particular year.
Check Current Payments and Deposits
Review required estimated tax payments. Employers must also be current on required federal tax deposits for the current quarter and the preceding two quarters. Resolve a compliance gap before assuming the offer can be processed.
Check Bankruptcy Status
The IRS does not consider an offer while you are in an open bankruptcy proceeding. If bankruptcy is under consideration, obtain legal advice before choosing a strategy or making nonrefundable offer payments.
Use the Official Pre-Qualifier
Enter financial and filing information in the IRS tool, or check eligibility in your Individual Online Account. Work through the figures yourself even if someone else later prepares the offer.
Review the Preliminary Result
Treat the result as a planning estimate. Check for missing assets, household income, duplicate expenses and unrealistic valuations. The IRS makes its decision from the actual application and investigation, not the tool result.
Read the Current Form 656-B Booklet
Download the booklet from the IRS. Review eligibility, payment options, form instructions, signatures, attachment checklist and terms before completing anything. Use the current version, including its low-income chart.
Calculate Assets, Income and Expenses
List cash, equity and other assets, then document income and allowable expenses using the booklet and current financial standards. Explain special circumstances. Do not transfer assets or omit property to make the application qualify.
Prepare the OIC Financial Statement
Use Form 433-A (OIC) for an individual, including appropriate self-employment information, or Form 433-B (OIC) for a business entity as directed. Attach the requested evidence. These are not the ordinary collection versions of Form 433.
Prepare Form 656 for the Appropriate Offer
Identify taxpayers, periods, legal ground, payment terms and funding source. Read all certifications. Separate individual and business liabilities may require separate offers and charges; use the booklet instructions for your ownership and filing situation.
Use the Correct Route for a Liability Dispute
Form 656-L is for doubt as to liability, not inability to pay. Its screening instructions direct many taxpayers to amended returns, audit reconsideration, a CP2000 response or another correction process first. It has no application fee or required initial offer payment.
Calculate Government Fees and Initial Payments
A standard Form 656 application has a $205 IRS fee unless the low-income exception applies. A lump-sum offer generally starts with 20% and pays the remainder in five or fewer payments within five months of acceptance. A periodic offer uses monthly payments over 6 to 24 months, beginning with submission and continuing during review unless exempt. Follow your accepted terms. These payments are separate from professional fees.
Check the Low-Income Certification
Qualifying individual taxpayers can be exempt from the application fee and required initial and periodic offer payments during review. Use the current Form 656 chart and instructions, including the available current-household-income test. This does not eliminate the agreed settlement amount if accepted.
Submit Through an Authorized Method
The IRS permits OIC applications through an Individual Online Account. Businesses and individuals using paper should follow the current booklet addresses and checklist. For paper payments, follow the separate-payment instructions and record electronic payment references where required.
Keep the Complete Submission
Save the signed application, exhibits, payment records and submission confirmation. Create a follow-up calendar and a folder for every later letter. Do not assume delivery confirmation means that the IRS accepted the offer for processing.
Answer the Assigned Employee
Reply to requests by the stated date with complete, consistent information. Ask for clarification if a calculation differs from yours. A failure to respond can lead to a return without the ordinary rejection appeal route.
Stay Current During Review
Continue required tax filing, estimated payments and employer deposits. Make required periodic offer payments unless exempt. Confirm how an existing installment agreement is treated once the offer is being processed before changing an automatic payment.
Read the Actual Outcome Letter
Acceptance, rejection and return have different consequences. A rejected offer generally has a 30-day appeal period from the letter date. A return generally has no formal appeal right. If you believe it was returned in error, ask about the limited reconsideration procedure within 30 days of the return letter; exclusions apply. Follow the specific letter.
Follow All Acceptance Terms
Pay the agreed amount on schedule and meet the offer terms, including timely filing and payment obligations for five years after acceptance. Default can restore the original liability less payments, with applicable interest and penalties. Keep the acceptance letter and compliance calendar.
Checkmarks are a personal reading aid. They are not submitted to an agency or saved as a case record. Enter personal or bank information only through the agency’s secure system.
Official IRS Forms and Resources
What Happens After Submission?
- The IRS screens the application, may request additional records and assigns an examiner if processable. Investigation can take many months; ask for a dated status update and outstanding items rather than treating elapsed time alone as evidence that work stopped.
- Most collection activity is suspended during a pending processable offer, subject to exceptions, and the collection period is affected. Existing levies are not automatically released. Ask about immediate hardship separately.
- Required offer payments generally are not refundable. Whether an application fee is returned depends on the outcome and reason. Read the letter before assuming all payments will be reimbursed.
Common Mistakes to Avoid
- Treating a large debt as proof of qualification, accepting a guaranteed settlement pitch or confusing a private fee with the IRS offer payment.
- Submitting before addressing required returns or current taxes; using Form 656-L only because you cannot afford payment.
- Choosing payment terms you cannot fund, missing information requests or assuming post-acceptance obligations end when the final offer payment is made.
When Professional Assistance May Be Appropriate
- An EA, CPA or tax attorney experienced with offers may help when valuations, business assets, household allocations or special circumstances require detailed analysis.
- Consult a tax attorney or qualified clinic for disputed liability, bankruptcy interaction, an impending legal deadline or rejection involving a legal issue. Ask whether an independent eligibility review can be purchased before a full engagement.
Free or Low-Cost Assistance
Frequently Asked Questions
Is the IRS Fee the Same as the Professional Fee?
No. The standard $205 IRS application fee is a government charge. Thousands of dollars quoted by a firm pay for private services, and the proposed settlement amount is another separate cost.
Does Passing the Pre-Qualifier Guarantee Approval?
No. It is a preliminary planning tool. The IRS evaluates the submitted evidence and may calculate a different payment capacity.
Can I Appeal a Rejection?
Generally, yes, within 30 days of the rejection letter. A returned offer is different. Read the exact outcome and seek timely advice if you dispute it.
Does an IRS Offer Resolve My State Debt?
No. A state may have its own settlement or hardship procedure. Keep separate case records, payments and deadlines.
Official guidance reviewed October 10, 2026. General education does not determine eligibility or extend a deadline. Follow the current agency instructions and the dates on your actual notice. These IRS procedures do not replace state-specific rules.