Key Insights
- An OIC allows you to pay a fraction of what you owe and have the rest legally forgiven.
- The IRS accepted approximately 13,000–16,000 OICs per year in recent years.
- Eligibility is based on your Reasonable Collection Potential (RCP) — not how much you owe.
- TaxWave's professionals know how to calculate, document, and present a strong OIC.
What Is an Offer in Compromise?
An Offer in Compromise (OIC) is a formal agreement with the IRS to settle a tax liability for less than the full amount owed. If the IRS determines that accepting your offer is in its best interest — because it's unlikely to collect the full amount otherwise — it will accept the offer and legally forgive the remainder.
This is not a loophole or a forgiveness program. The IRS evaluates every OIC based on your financial ability to pay. Getting accepted requires a thorough, accurate, and well-documented application. Applications with errors or incomplete financial information are routinely rejected — which is why professional help matters.
Eligibility Requirements
- You must be current on all required tax filings.
- You must be current with estimated tax payments for the current year.
- You cannot be in an open bankruptcy proceeding.
- You must demonstrate that you cannot pay the full debt through an installment agreement within the remaining Collection Statute.
- The offer amount must be equal to or greater than your Reasonable Collection Potential (RCP).
How the IRS Calculates Your Offer (RCP)
The IRS calculates your Reasonable Collection Potential (RCP) — the minimum acceptable offer amount — using two components:
Net Realizable Asset Equity
The liquidation value of all assets — bank accounts, real estate equity, retirement accounts, vehicles — minus any encumbrances. The IRS applies a discount factor (quick-sale value).
Future Income Component
Based on your monthly disposable income (gross income minus IRS-allowed expenses) multiplied by 12 or 24 months, depending on the payment option chosen.
Understanding and accurately presenting these numbers is critical. TaxWave maximizes every allowable expense, accounts for special circumstances, and structures the offer to reflect your actual financial reality — not the most aggressive position the IRS might take.
How TaxWave Builds Your OIC
We begin with a thorough financial analysis — income, expenses, assets, liabilities — using IRS Form 433-A. We calculate your RCP and determine if an OIC is the right strategy or if another program (like CNC or installment) would serve you better. If OIC is the right fit, we prepare every page of the application, gather all required documentation, and submit a complete, professionally presented package that gives your offer the best chance of acceptance.