IRS Offer In Compromise Calculator And Payment Estimator
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.
How this Offer in Compromise estimator works
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.
Reasonable Collection Potential, explained simply
Reasonable Collection Potential (RCP) estimates what the IRS can collect from available asset equity and future income after allowed living expenses. For an offer based on doubt as to collectibility, it is the starting point for deciding whether full payment is realistic and what amount to propose. It is not a universal test for all three offer grounds. The simplified calculation below has two parts:
- Net value of your assets. Use the applicable IRS worksheet for each asset and subtract eligible secured debt as instructed. Some assets use an 80% quick-sale value, but cash, investments, retirement accounts, real estate and vehicles do not all use the same rule. Do not multiply everything you own by 80%.
- 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.
Who may qualify for an Offer in Compromise
Doubt as to collectibility: your assets and income are not enough to pay the full tax debt. This is the ability-to-pay question the estimator helps you explore.
Doubt as to liability: there is a genuine dispute about whether you owe the tax or the correct amount under the law. A low calculator result does not establish this ground; it uses a separate application, Form 656-L.
Effective tax administration: the tax is legally owed and collectible, but full payment would create economic hardship or would be unfair and inequitable because of exceptional circumstances. This requires a separate factual review, not just a low estimate. See the IRS explanation of the three offer grounds.
For a Form 656 financial offer, confirm that required returns and estimated payments are current and that you are not in an open bankruptcy. Employers must make required federal tax deposits for the current and last two quarters. These processing requirements do not guarantee acceptance.
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.
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
For a Form 656 offer, reconcile the estimate with the current financial worksheets and supporting records. Keep the $205 application fee separate from offer payments: the IRS returns the fee when an application is not eligible for processing, but submitted offer payments generally go toward the tax debt rather than back to you. Qualifying individuals, including eligible sole proprietors, may use Low-Income Certification; corporations and partnerships do not qualify for that waiver. A doubt-as-to-liability offer uses Form 656-L instead and has no application fee. Review the instructions for the type of offer you are making.
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.
To see how the choices compare, review the main tax debt relief programs and how an IRS Offer in Compromise works.
What The Offer Estimate Means
| Estimate Item | What It Represents | What Still Requires Confirmation |
|---|---|---|
| Reasonable Collection Potential | A simplified estimate based on entered asset equity and future disposable income | IRS valuation, allowable expenses, exclusions, and supporting records |
| Estimated Offer Amount | A planning figure produced from the information entered | The minimum acceptable amount and whether an offer is appropriate |
| Payment Choice | The selected lump-sum or periodic-payment calculation | Required deposits, timing, eligibility, and current IRS procedures |
| Professional Review | A check of facts, forms, and alternative collection options | What should actually be filed and how the IRS may evaluate the case |
Frequently Asked Questions
Is this Offer in Compromise estimator accurate?
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) estimates available asset equity plus future income after allowed living expenses. For the simplified financial-offer calculation, future remaining monthly income generally uses a 12-month lump-sum or 24-month periodic-payment multiplier. Asset worksheet rules vary by category. RCP is not a determination of eligibility or a universal test for doubt-as-to-liability and effective-tax-administration offers.
How does the IRS calculate my offer amount?
The IRS considers available asset equity plus future remaining income. An 80% quick-sale value is used for some assets, not every account: cash, investments, retirement assets, real estate and vehicles have different worksheet rules. Future remaining income generally uses the applicable 12- or 24-month multiplier. IRS expense standards, actual-expense limits and documented exceptions affect the result. Use the current Form 433-A (OIC) or 433-B (OIC), not one blanket discount.
Who qualifies for an Offer in Compromise?
The IRS considers ability to pay, assets and financial circumstances; an educational estimate does not establish eligibility. Required returns and estimated payments must be current, and you cannot be in an open bankruptcy. Employers must make required federal tax deposits for the current and last two quarters. Check the IRS Pre-Qualifier and current application instructions before applying.
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?
For a Form 656 offer, the application fee is $205 plus the required offer payment. Qualifying individuals, including eligible sole proprietors, may use Low-Income Certification to waive the fee and payments during review; corporations and partnerships cannot. If an application is not eligible for processing, the IRS returns the application fee. Offer payments generally are not refunded and are applied to tax debt if the offer is not accepted. A doubt-as-to-liability offer uses Form 656-L and has no application fee.
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 apply yourself using the IRS Form 656-B booklet and free Pre-Qualifier. Professional help may be useful for complex assets, business taxes, missing returns or disputed financial calculations, but hiring someone does not guarantee acceptance or a better outcome. Verify the individual’s credentials and written fee, compare alternatives and avoid anyone promising an IRS decision before reviewing your records.