IRS Offer in Compromise Calculator
This IRS offer in compromise calculator uses IRS formulas, eligibility criteria, and your income and asset numbers to show you an estimate of your potential tax settlement. Similar to the IRS’s OIC pre-qualifier tool, it helps you see whether an offer in compromise might be the right option for your tax debt.
It also shows you how to get help if you don’t meet the eligibility criteria and explains when to work with a tax attorney so you don’t end up paying more than you need to or having your offer rejected. Get help from our offer in compromise attorneys now – or look at settlement possibilities with the offer in compromise calculator.
IRS Offer in Compromise Qualifier
See whether you can apply for an Offer in Compromise right now, and whether settling for less than you owe is realistic, using the same rules and formulas the IRS applies.
Answer a few questions to get an honest read and your next step. It takes about two minutes.
What you owe
Let’s start with the basics.
Can you apply right now?
Before the IRS will even look at an offer, a few things have to be true. These do not stop you from getting an estimate, but they decide whether you can apply today.
Your monthly income and expenses
The IRS looks at what is left each month after your necessary living costs. We will work that out for you.
Your assets
The IRS looks at what your assets are worth, minus what you owe against them.
How to Use This IRS Offer Calculator
Want to see if you might qualify for an offer and if so, how much? It’s just four steps:
- Enter what you owe
- Answer a few questions about unfiled returns, bankruptcy, & estimated tax payments
- Put in your monthly income and expenses
- Enter the value of your assets and what you owe on them
Then, the offer in compromise calculator will let you know if an offer is right for you and how much the IRS might settle for. The possible results include:
- You’re not eligible to apply right now.
- You’re possibly eligible for a settlement and how much.
- You’re more likely to qualify for a different option like a payment plan or currently not collectible status.
If you’re curious about what offer the IRS might accept or even whether a settlement is even possible in your situation, this tool is the perfect place to start your research. But use the offer in compromise calculator with the awareness that it just looks at the basics; the IRS looks at a lot more.
How the IRS Actually Calculates an Offer
Here’s how the IRS determines what to accept when calculating an offer in compromise. If you’re ready for a deep dive, this overview can help you interpret your settlement options from the OIC calculator with a bit more nuance as well.
Reasonable collection potential – it’s what the IRS could reasonably collect from you if they had to go in and just take the money. It’s also the amount the agency will accept when you apply for an offer in compromise. So, how do you calculate RCP:
- Asset value: 100% of cash and liquid assets, 80% (aka quick sales value) of most physical assets minus the amount you owe.
- Disposable income: your monthly income after taxes, minus your expenses but only up to the IRS’s expense standard. They set limits for what they accept on everything from house payments to grocery bills.
- The math: your asset value plus your disposable income for 12 or 24 months. The IRS uses a year of disposable income if you want to settle in a lump sum and two years’ worth if you settle over 24-monthly payments.
For example, say your asset equity is $20,000 and your monthly disposable income is $1,000. The lump sum settlement would be: $20,000 + 12 x $1,000 = $32,000. But the periodic payment settlement would be: $20,000 + 24 x $1,000 = $44,000.
An Offer in Compromise Calculator Can Only Take You So Far
The math is complicated – the calculator does the basics but skips some details. The asset values (for example, the value of your home) are subjective – don’t overinflate the value of your home or you’ll end up overpaying. Extenuating circumstances can also affect the amount of your offer – even if you’re using a calculator that takes the IRS’s collection standards for the current tax year into account, it won’t be able to factor in arguments that convince the IRS to increase the numbers.
The calculator also doesn’t ask about the collection statute expiration date (CSED) – that date can determine strategy, and sometimes, it’s best not to apply when the debt is about to age out anyway.
Why should you use an offer in compromise calculator? To start your research, to get an idea if you might qualify, and to learn more about the other options that can help when you owe tax debt you can’t afford to pay. But you should always apply with the help of a tax professional.
How Damiens Law Helps With Offers in Compromise
When you hire Damiens Law to represent you, we run your numbers against the actual IRS allowable standards, calculate the lowest possible offer based on all the case factors, prepare and defend the offer through IRS review, and handle any road blocks such as unfiled returns before the application goes in.
FAQs
How much should I offer the IRS in an offer in compromise?
You should offer the IRS the lowest possible amount you can get accepted under the law. To find that number, consult with an attorney, or complete the RCP calculations in IRS packet 656-B but also read the instructions to learn about extenuating circumstances or when to pursue an offer under effective tax administration.
How do I get an offer in compromise approved?
Ensure you meet the pre-qualification requirements, submit a fully complete application, make sure your expenses are allowable with the IRS’s standards, and base your offer on your reasonable collection potential. Work with an experienced tax attorney for best results.
How long does an offer in compromise take?
It can take anywhere from six months to two years, but when an attorney is handling it, they deal with the IRS, all collections are stopped, and you’re off the hook until the case is done. The relief comes right away on some level, even though the settlement approval can take a while.
Can I still qualify if I owe payroll or business taxes?
Yes, but the stakes are higher, and the process is harder for settling payroll taxes. An experienced offer in compromise attorney, especially one who’s secured offers on trust fund taxes, is key here.
What is the IRS offer in compromise acceptance rate?
It varies from year to year, but normally about 40 to 70% of offers get accepted. That means that the IRS rejects over half of all offers in many years – in a good year, the agency might accept a quarter or a third of the applications. The ones that get rejected the most tend to make mistakes that are easy to avoid when you work with a professional.
What if my offer gets rejected?
You should reach out to an attorney and appeal or reapply depending on the situation. Don’t apply using an offer from a calculator. Always work with an attorney to ensure the highest success rates.
Get Real Help With an Offer in Compromise
You’ve looked at the calculator, and now it’s time to talk with a professional. Get help from a local attorney to file an offer in compromise.
Our consultations are free, confidential, and no pressure. We’ll run the numbers and take you through the process. Just contact us online or by phone at (601) 957-9672 to learn about our Offer in Compromise services and how the attorneys at Damiens Law can help with your case.
