What is the IRS Offer in Compromise acceptance rate?

The acceptance rate varies significantly year to year. Over the ten years from 2015 to 2024, the IRS accepted approximately 36.7% of submitted offers. The rate was 42.1% in 2023 but dropped to 21.4% in 2024 as the number of applications increased. A carefully prepared application that accurately reflects your Reasonable Collection Potential significantly improves your chances.

What is Reasonable Collection Potential (RCP) and how does it affect my offer?

Reasonable Collection Potential (RCP) is the IRS's calculation of the maximum it could collect from you through your assets and future income over a reasonable period. Your offer amount must generally equal or exceed your RCP. RCP is calculated as the net realizable value of your assets plus your monthly disposable income multiplied by a factor (12 months for a lump sum offer, 24 months for a periodic payment offer). Understanding your RCP before submitting an offer is critical to determining whether an OIC is realistic for your situation.

What are the three grounds for an Offer in Compromise?

The IRS accepts OICs on three grounds: (1) Doubt as to collectibility — the most common, accounting for approximately 90% of accepted offers, applies when your assets and income are less than the full tax liability; (2) Doubt as to liability — applies when there is a genuine legal dispute about whether the tax was correctly assessed; (3) Effective tax administration — applies when paying in full would create economic hardship or would be unfair due to exceptional circumstances, even if the debt is legally owed and collectible.

What is an Offer in Compromise (OIC)?