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  • dave rosa

How to Settle IRS Tax Debt Yourself

Updated: Sep 21


Coast to Coast - IRS Help

IRS Tax Relief - Fresh Start Program

The IRS offers a tax relief program to settle a tax debt. This would be an Offer in Compromise.


Yes, you can. It is possible that an inexperienced taxpayer can navigate the Offer in Compromise process and "strike gold."

As the saying goes, "even a blind squirrel can occasionally bump into an acorn."

This IRS encourages novices to do their own Offer in Compromise submissions. Why does the agency encourage it. Well the answer is because most OIC rejections are due to paperwork and procedural errors. It is in the agency's best interest to have you "do it yourself." Over the past years, the IRS approves approximately 42% of all OIC submissions. 70% of the rejections are "do it yourself."

Should your Offer in Compromise be rejected, you will be right back where you started, except the IRS will now be armed with all of your financial information.

WE PROMISED YOU INFO TO DO AN OIC YOURSELF, SO KEEP ON READING. How can I settle my IRS debt for less than I owe? The federal government considers an Offer in Compromise (OIC) a last resort if you can’t pay what you owe in taxes. The qualifications are designed to be confusing. Generally, the IRS might let you pay less than you owe if it is proven that the agency is unlikely to collect the full balance owed. The IRS has 10 years from date of assessment to collect a tax debt. This is called the Statute of Limitation.

How do I know if I qualify for an Offer in Compromise? The IRS will consider a variety of factors when deciding to accept or reject an application for an OIC, including your ability to pay, your income, your allowable expenses and your current asset equity. To find out if you qualify you can call Flat Fee Tax Relief and we can tell you during our consultation or , you can fill out an online questionnaire provided by the IRS on their website. Filing all your relevant tax returns (past 6 years) is one requirement to be considered. Another is making your estimated tax payments, if applicable. You are ineligible if you are currently in a bankruptcy proceeding. How much should I offer to settle my IRS debt? Wow, what a great question. Knowing what your settlement offer should be can be tricky and confusing. Offer too much and you "screw yourself." Offer too little and you get rejected. This is just another reason why you might want to have an experienced attorney prepare your Offer in Compromise. You must provide documentation that backs up your settlement claim. Bank records, income information, and expenses will need to be provided. The IRS’s Form 433-A (this is a financial form) offers guidance for an appropriate offer, meaning one you can not only afford but that the government will find acceptable for recouping their money.

Ultimately, the government is looking for a settlement offer that equals the most money the agency could expect to get back in the 10 years they have to collect the taxes, penalties and interest. The settlement amount also has to be something you can afford. The IRS takes into consideration your bills and monthly expenses (allowable expenses) when determining how much you can pay. They won’t just take your word for it — the IRS will do their own calculations once you have submitted your offer. If your OIC is rejected, you will be forced into an installment plan to pay off what you owe.

IRS payment plan options: You can either pay the settlement offer in full or make installment payments to satisfy your OIC. If you offer a lump sum payment, the amount of the settlement can be less than of paid over a period of time. Once again, this is easier said than done. Is there an alternative to an Offer in Compromise? If you either owe less than $10,000 (the minimum for an OIC) or can't get the IRS to approve your settlement offer, it may be possible to have you placed into Currently not Collectible status (CNC). If you are placed into CNC status, you will cease to make any payments as the Statute of Limitations continues to run. This article should have provided you with some information regarding submitting a "do it yourself" Offer in Compromise.

The tax professionals have a 96% Offer in Compromise success rate. This is well above the national average. So, our question to you is this: when it is possible to have an experienced team like Flat Fee Tax Relief, why would you want to do it yourself? To us, doing it yourself makes absolutely no sense.

OK, now it's up to you. It's your choice.


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