--- title: Offer in Compromise: How It Works and Who Gets One url: https://taxtruce.com/coverage/offer-in-compromise updated: 2026-10-29 --- # Offer in compromise, explained Settle for less, if the IRS agrees. Most offers fail. Updated October 8, 20264 sources[Fact checked](/editorial-standards) 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. The short answer 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 **Most offers are turned down** In fiscal year 2025, people sent the IRS 38,797 offers. The IRS accepted 5,464. That is about 1 in 7. **It costs money to apply** 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. **Two ways to pay** 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 be caught up first** You must file all your returns and make your estimated tax payments. You can't be in an open bankruptcy. **Collection slows down** 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. **Watch out for big promises** 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](https://www.irs.gov/payments/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](https://www.irs.gov/payments/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. Source: [IRS: Offer in Compromise Pre-Qualifier tool](https://irs.treasury.gov/oic_pre_qualifier/) Can I appeal a rejected offer? Yes. You can appeal to the IRS Independent Office of Appeals. Source: [IRS: Offer in compromise](https://www.irs.gov/payments/offer-in-compromise) Results depend on your situation. Not every case qualifies. ## More guides [**What is an offer in compromise?**](/answers/what-is-an-offer-in-compromise)[**Who qualifies for an offer in compromise?**](/answers/who-qualifies-for-an-offer-in-compromise)[**How much does an offer in compromise cost?**](/answers/how-much-does-an-offer-in-compromise-cost)[**What percent of offers does the IRS accept?**](/answers/what-percent-of-offers-does-the-irs-accept)[**What is the IRS OIC pre-qualifier?**](/answers/offer-in-compromise-pre-qualifier)[**Can I settle my tax debt for a small part of what I owe?**](/answers/can-i-settle-for-less-than-i-owe) ## Sources 1. [IRS: Offer in compromise](https://www.irs.gov/payments/offer-in-compromise) 2. [IRS Tax Tip 2026-40: Offer in compromise](https://www.irs.gov/newsroom/eligible-taxpayers-may-be-able-to-resolve-tax-debt-through-an-offer-in-compromise) 3. [IRS Data Book: Collections, penalties and appeals (FY2025)](https://www.irs.gov/statistics/collections-activities-penalties-and-appeals) 4. [IRS: Offer in Compromise Pre-Qualifier tool](https://irs.treasury.gov/oic_pre_qualifier/) Other ways to get help ## Compare with the others [Can pay over time ### Payment plan Pay what you owe a little each month. See payment plan](/coverage/installment-agreement)[Can't pay at all ### Not collectible The IRS pauses collection while money is too tight. See not collectible](/coverage/currently-not-collectible)[Hit with penalties ### Penalty relief Ask the IRS to remove late filing or late payment penalties. See penalty relief](/coverage/penalty-abatement) Run the numbers with our [free tax tools](/tools), like the penalty and payment plan math.