Taxes, Cash & Savings · Surprise rank #39
Can’t Pay Your Tax Debt? Settle With the Government for Less Than You Owe!
An IRS Offer in Compromise can settle qualifying federal tax debt for less than the full amount owed when the IRS determines the offer reflects what it can reasonably collect or another compromise basis applies.
Who
Taxpayers who cannot fully pay their federal tax debt or whose financial circumstances support an IRS compromise and who satisfy filing/compliance requirements.
What to do
Start here: Use the IRS Offer in Compromise Pre-Qualifier or online account, then follow Form 656-B instructions if the route looks viable.
Eligibility: Generally you must have filed required returns, made required estimated payments, not be in an open bankruptcy case and satisfy current compliance rules. The IRS considers income, expenses, asset equity and ability to pay.
What you get
A formal agreement with the IRS that can settle eligible federal tax liabilities for less than the full balance.
Benefit: The difference between the accepted settlement amount and the federal tax debt resolved by the agreement.
Possible value: Varies widely; there is no standard discount percentage.
Good to know
Important: This is not a guaranteed 'pennies on the dollar' program. The IRS says OIC is not for everyone and normally expects the most it can reasonably collect. The application fee is $205 plus an initial payment unless the low-income certification applies.
Availability: Active
Why people miss it: Aggressive tax-relief advertising makes the legitimate IRS program sound either too good to be true or automatically available when it is actually a strict financial process.
Sources reviewed: Aug 10, 2026