Most people who apply don't get an offer accepted. In fiscal year 2025 the IRS accepted 5,464 of 38,797 offers. The IRS has a free pre-qualifier tool.
An offer in compromise is a deal where the IRS takes less than the full amount you owe. The IRS looks at your income, your bills and what you own. It usually says no if you could pay in full with a payment plan.
Who it fits
People who truly cannot pay the full debt, even over time, and who have filed every return.
- Who it fits
- Can't pay in full
- Cost
- $205 application fee, plus a first payment. Low income filers may skip both.
- IRS form
- Form 656 (in the Form 656-B booklet)
What to know first
In fiscal year 2025, people sent the IRS 38,797 offers. The IRS accepted 5,464. That is about 1 in 7.
Every offer needs a $205 fee and a first payment. If you meet the low income rules, you skip the fee and the payments while the IRS reviews it.
Lump sum: send 20% of your offer when you apply, then the rest in 5 or fewer payments. Periodic: keep paying each month while the IRS reviews it.
You must file all your returns and make your estimated tax payments. You can't be in an open bankruptcy.
While the IRS reviews your offer, it stops most collection. But the 10 year collection clock gets longer, and the IRS may still file a lien.
The IRS warns about "OIC mills" that promise too much and charge high fees. They are on the 2026 IRS Dirty Dozen list.
Common questions
Does the IRS give back the $205 if it says no?
No. If the IRS rejects your offer, it keeps the fee and puts your payments toward your debt. If it returns your offer because you were not eligible, it gives the fee back.
Source: IRS: Offer in compromise
How long does the IRS take?
If the IRS does not accept or reject your offer within 2 years, it is accepted automatically. Time spent in an appeal does not count.
Source: IRS: Offer in compromise
Is there a free way to check?
Yes. The IRS has a free Offer in Compromise Pre-Qualifier tool online. It does not need a login.
Can I appeal a rejected offer?
Yes. You can appeal to the IRS Independent Office of Appeals.
Source: IRS: Offer in compromise
Results depend on your situation. Not every case qualifies.
