Offer in compromise: the basics
An offer in compromise is an agreement to settle a tax debt for less than the full amount. It exists for people who truly cannot pay. It is not a discount program, and many applications are not accepted.
Basic eligibility
You must have filed all required returns and made required estimated payments, not be in an open bankruptcy, and (if you are an employer) have made recent tax deposits.
Before anything else, try the free IRS Offer in Compromise Pre-Qualifier. The IRS Pre-Qualifier tool gives a preliminary answer. A rejected offer can be appealed within 30 days.
What it costs to apply
- Application fee: $205. Non-refundable, plus a non-refundable initial payment. People who meet the IRS low income certification guidelines do not have to send the fee or the initial payment.
- While the IRS reviews your offer, penalties and interest continue.
Red flags: promises to wipe out most of your debt, promises of a sure result, or big fees before anyone looks at your finances. The IRS makes the decision, and a payment plan is often the more realistic path.
Common questions
Can I settle my IRS debt for less?
Sometimes, through an offer in compromise. The IRS generally accepts an offer only when it believes it cannot collect the full amount, based on your income, expenses and assets. Many people who apply do not qualify.
How much does an offer in compromise cost to apply?
The application fee is $205. Non-refundable, plus a non-refundable initial payment. People who meet the IRS low income certification guidelines do not have to send the fee or the initial payment.
Should I pay a company that promises to settle my tax debt?
Be careful. No one can guarantee the IRS will accept an offer. Use the free IRS Pre-Qualifier first, and ask any professional how they will check that you qualify before you pay.
Sources
Facts on this page were checked against these sources on October 8, 2026. Rules change each year; confirm with the official source before you file.