By Eric Pemper, Founder of CuraDebtHelping people resolve unsecured, tax, and business debt since 2001 · BBB A+ accredited
Offer In Compromise Payment Estimator
The short answer
This Offer in Compromise payment estimator is an educational fit-check that gives you a rough sense of whether settling your IRS tax debt for less might be worth exploring. It is not an IRS approval and not a determination that you qualify, the IRS decides that through Form 656 and your financial statement. The math turns on your Reasonable Collection Potential: the net value of your assets plus your future disposable income. Use the estimate as a starting point, then check whether you may qualify in a free review before you file.
Use the estimator below to get a rough starting figure from your assets and monthly budget. It is educational only; the IRS makes the final decision.
Estimate reasonable collection potential using net assets and remaining monthly income.
The estimator above is an educational fit-check, not an IRS decision. It walks you through the same idea the IRS uses, your ability to pay, and gives you a rough sense of whether an Offer in Compromise (OIC) might be worth exploring. It does not calculate an exact offer, and it is not a determination that you qualify. Only the IRS decides that, after you file the formal paperwork.
Think of it as a starting point. If the estimator suggests an OIC could be a potential fit, the real work is running the actual numbers accurately, which is where the calculation below, and often a licensed professional, comes in. For the full landscape of programs, see our overview of IRS tax debt relief options.
ImportantThis tool is educational only. It is not an offer, a guarantee, or an IRS approval. The IRS decides every Offer in Compromise through its own review of Form 656 and your financial statement (Form 433-A (OIC) or 433-B (OIC)).
Offer In Compromise Payment Estimator: a quick visual summary of offer in compromise and your options. Irs tax debt relief.
Reasonable Collection Potential, explained simply
The number at the heart of every Offer in Compromise is your Reasonable Collection Potential (RCP). In most cases, the IRS will not accept an offer for less than your RCP. The formula is simpler than it sounds, it is just two pieces added together:
Net value of your assets. The IRS takes the "quick-sale value" of what you own, often around 80% of fair market value, then subtracts what you still owe on each asset. Cash is generally counted at face value.
Future disposable income. Your monthly income minus IRS-allowed living expenses, multiplied by 12 for a lump-sum offer or 24 for a periodic-payment offer.
Add those two together and you have your RCP, the minimum the IRS generally expects. A quick example: if your assets net out to about $5,000 and your monthly disposable income is $200, a lump-sum RCP would be roughly $5,000 plus ($200 x 12), or about $7,400. Because the IRS uses its own expense standards rather than your actual spending, a realistic offer often looks different from what you would guess. If a payment plan looks more like your situation, see how an IRS payment plan works and how to apply.
Why estimates are only estimatesTwo people who owe the same amount can have very different RCPs, because allowable expenses follow IRS national and local standards, not your real budget. That is exactly why any estimate is educational, and why the IRS runs its own calculation before deciding.
Who may qualify for an Offer in Compromise
The IRS considers an OIC mainly under Doubt as to Collectibility, meaning your income and assets cannot cover the full balance before the collection period ends. Two narrower grounds also exist: Doubt as to Liability (you dispute that you owe the amount) and Effective Tax Administration (paying in full would be unfair or cause hardship). To be eligible at all, you generally must be current on all tax filings, not in an open bankruptcy, and up to date on estimated payments.
Honest expectations matter here. The IRS accepts only a portion of the offers it receives each year, and it rejects those that come in below the taxpayer's RCP or arrive with incomplete documentation. A well-prepared, realistic offer stands a far better chance. The IRS also offers a free Offer in Compromise Pre-Qualifier tool for a preliminary read, though it does not guarantee acceptance either.
How to apply for an Offer in Compromise
If the estimator and your numbers suggest an OIC could fit, applying is a paperwork-heavy process where accuracy is everything. Here is the path most taxpayers follow.
Before you fileMake sure every required return is filed and you are current on estimated payments. The IRS returns an offer from a taxpayer who is not in filing compliance, so this comes first, before anything else.
If the amount you owe is substantial, it is worth understanding all your options before you commit to the OIC route. Our guide on what happens if you owe the IRS more than $25,000 compares settlement against the alternatives.
Getting the numbers right
Because acceptance hinges on your RCP, the single most valuable thing you can do is calculate it accurately and present your finances cleanly. Lowball offers well under your RCP are routinely rejected, and the application fee and initial payments you send with a non-low-income offer are generally not refundable. The IRS has also warned about "mills" that push an OIC on people who clearly do not qualify.
A trustworthy professional reviews your transcript and finances first, sets honest expectations, and only files an offer that stands a real chance, and never guarantees a result before doing that work. That single discipline, honest numbers first, separates a legitimate professional from an OIC mill.
After helping people resolve IRS debt since 2001, here is my honest take on any Offer in Compromise estimator, including this one: use it as a starting point, not a verdict. It can tell you whether settling for less is worth looking into, but it cannot tell you what the IRS will do, only the IRS decides that, through Form 656 and your financial statement. Be very careful with anyone who guarantees an OIC before reviewing your transcript. A good professional runs the real numbers first, sets honest expectations, and only files an offer that stands a genuine chance.
It gives a rough, educational read, not a precise figure. The estimator uses the same logic the IRS applies, your ability to pay, but it cannot account for every detail of IRS national and local expense standards. Treat the result as a starting point for a conversation, not a determination that you qualify or a promise of any specific offer amount.
Does this tool mean I qualify for an Offer in Compromise?
No. This estimator is educational only and is not an IRS approval. The IRS decides every Offer in Compromise through its own review of Form 656 and your financial statement, Form 433-A (OIC) for individuals or 433-B (OIC) for businesses. A favorable estimate here means an OIC may be worth exploring, nothing more.
What is Reasonable Collection Potential?
Reasonable Collection Potential (RCP) is how the IRS measures your ability to pay. It adds the quick-sale value of your assets, minus what you owe on them, to a set number of months of your future disposable income, 12 for a lump-sum offer or 24 for periodic payments. In most cases the IRS will not accept an offer below your RCP.
How does the IRS calculate my offer amount?
The IRS values your assets at roughly 80% of fair market value (quick-sale value), subtracts any loans against them, then adds your monthly disposable income multiplied by 12 or 24. Disposable income uses IRS-allowed living expense standards, not your actual spending, which is why the figure often differs from what people expect.
Who qualifies for an Offer in Compromise?
The IRS mainly accepts offers under Doubt as to Collectibility, when your income and assets cannot cover the full balance before the collection period ends. You generally must be current on all tax filings, not in open bankruptcy, and up to date on estimated payments. The IRS Pre-Qualifier tool gives a preliminary read on eligibility.
What is the Offer in Compromise acceptance rate?
The IRS accepts only a share of the offers submitted each year, so acceptance is far from automatic. Offers are commonly rejected when they fall below the taxpayer's Reasonable Collection Potential or arrive with incomplete documentation. A realistic, well-documented offer stands a much stronger chance than a lowball one. Results vary by situation.
How much does it cost to apply for an OIC?
The application fee is $205, submitted with Form 656, plus an initial payment toward your offer. If you meet the IRS Low-Income Certification based on household income and family size, both the fee and initial payments are waived while your offer is reviewed. Payments sent with a non-low-income offer are generally not refundable.
What forms do I need for an Offer in Compromise?
You file Form 656, the Offer in Compromise itself, along with a financial statement, Form 433-A (OIC) for individuals and sole proprietors or Form 433-B (OIC) for businesses. If you are disputing that you owe the debt at all, you would instead use Form 656-L for Doubt as to Liability. Accurate financials are essential.
Can I lower my estimated offer by spending down assets?
Not reliably, and it can backfire. The IRS reviews recent financial history and can count dissipated assets, money you spent or transferred, as if you still had it. Rather than trying to game the number, focus on presenting accurate financials. A licensed professional can help you do that correctly and avoid mistakes that get offers rejected.
Should I apply for an Offer in Compromise myself or hire a pro?
You can file an OIC yourself using the IRS Form 656 Booklet, and for simple situations that may be fine. Because the outcome hinges on correctly calculating your Reasonable Collection Potential and presenting your finances accurately, many people with larger balances choose a licensed professional to improve their odds and avoid costly errors.
Please noteThis article is general information, not legal or tax advice. Laws and IRS rules change and every situation is different, so consult a licensed attorney or tax professional about your specific case.
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