Can You Negotiate My Debt?
This could possibly be our most common phone call:
“Can you negotiate my debt? I heard the IRS takes pennies on the dollar.”
The answer is yes or no depending on your financial situation. Below are examples to help explain. Let’s assume the taxpayer owes $70,000.00 in tax liability.
Example Scenarios for Offer In Compromise (OIC)
1. Adrian
- Net Worth: $100,000.00
- Annual Income: $65,000
- Family: No kids, no wife
Outcome:
If Adrian attempts an OIC, he will fail.
He has savings more than enough to pay off the debt.
He earns about $3,800/month after taxes which allows for a potential $800.00 monthly IRS payment.
Result: FAIL
2. Ahmed
- Profession: Trains show dogs for a living
- Net Worth: $100,000.00
- Annual Income: $30,000
- Family: No kids, no wife
Outcome:
If Ahmed attempts an OIC, he will fail.
His savings are more than enough to pay off the debt.
His seasonal line of work has no bearing on his ability to pay.
Although his income is below the IRS threshold for living, his savings ruin his chances.
Result: FAIL
3. Joe
- Health Condition: MPS
- Net Worth: $0.00
- Annual Income: $100,000
- Family: No kids, no wife
Outcome:
If Joe attempts an OIC, he will fail.
His health condition does not affect his ability to work.
He earns well over the IRS threshold of income for an OIC on a monthly basis.
Result: FAIL
4. Rafael
- Net Worth: $0.00
- Annual Income: $30,000
- Family: No kids, no wife
Outcome:
If Rafael attempts an OIC, he is a STRONG CANDIDATE.
He has no money to pay the debt today.
It is doubtful that he can pay it back in the future.
Result: Strong Candidate
Final Thoughts on OIC
I hope this sheds light on the Offer In Compromise process.
Call our office to see if you qualify.
Frequently Asked Questions
What is an Offer In Compromise (OIC)?
An Offer In Compromise (OIC) is a program through which the IRS may settle a taxpayer’s debt for less than the full amount owed. It is granted based on the taxpayer’s inability to pay due to financial hardship, low income, and lack of assets.
Does everyone qualify for an Offer In Compromise?
No, qualification depends on your financial situation. If you have sufficient income or assets to pay off your debt, the IRS will likely reject your offer. Only those who truly cannot pay now or in the foreseeable future may qualify.
Can I qualify for OIC if I have no assets but a high income?
Probably not. Even if you don’t have assets, a high and steady income—especially above IRS thresholds—will typically disqualify you. The IRS assesses both current income and ability to pay over time.
Will my health condition help me qualify for an OIC?
Not necessarily. Unless your health issue directly prevents you from earning income, the IRS will still consider your earning potential. A medical diagnosis alone does not guarantee eligibility.
When should I contact a tax professional about my debt?
You should contact a professional if you’re unsure whether you qualify for relief programs like OIC. They can evaluate your finances in detail and help determine your best options for resolving IRS debt.