Reviewed by Sandra Wolfe, Enrolled Agent · Last reviewed: June 2026

When individuals or businesses are unable to fully pay their tax debt, the IRS offers a program called an Offer in Compromise (commonly referred to as the fresh start program), which may allow eligible taxpayers to settle their debt for less than the full amount owed. While not everyone will qualify, and the approval process can be detailed and documentation-heavy, there are legitimate options available for many taxpayers facing financial hardship.

While tax debt can feel overwhelming, you do not have to handle it alone. With the right guidance, understanding of the process, and proper preparation, it is possible to work toward a manageable resolution and regain financial stability.

How to Get Your Offer in Compromise Approved

The first step in pursuing an Offer in Compromise is making sure all required tax returns are filed and up to date. If your filing history is not current, the IRS does not have a complete picture of your tax obligations and generally cannot determine what portion of the debt it believes it can reasonably collect. In plain terms, compliance comes first.

For many taxpayers, this is also where working with an experienced tax professional can be helpful. A professional can review your IRS account history, identify any missing returns, and help make sure you are back in compliance before an offer is submitted.

Once your filings are current, an Offer in Compromise package generally includes:

• Form 433-A(OIC) for individuals or Form 433-B(OIC) for businesses, along with supporting financial documents
• Form 656, which is the actual offer application
• The required application fee, unless you qualify for a low-income waiver
• The required initial down payment, unless you qualify for a low-income waiver

The key to approval is not simply showing that the tax debt is large. The IRS is looking at whether the offer accurately reflects your reasonable collection potential, which includes your income, expenses, assets, equity, and overall ability to pay. This means the financial information has to be complete, accurate, and well-supported.

When submitting the offer, you will generally need to choose between a lump-sum cash offer or a periodic payment offer, and in many cases, payments must continue while the IRS reviews the offer. If the offer is not approved, those payments are not refunded; they are applied to the outstanding tax balance. It is important to ensure that during the offer review period and once the offer is accepted, that all payments towards the offer are made timely or the offer may default and the process will have to start all over.

If the IRS rejects the offer, that does not always mean the process is over. Taxpayers usually have 30 days from the date of the rejection letter to request an appeal. This appeal window is important because it may give you another opportunity to provide clarification, correct misunderstandings, or challenge the IRS’s calculation before the case moves forward.

Who Gets Approved When They Submit an Offer?

The offer in compromise is accepted by the IRS when the agency believes it represents the best chance of collecting the largest possible portion of the outstanding debt. The best way to determine what an appropriate offer will be is to work with a tax professional who understands the process and has a track record of getting approvals for clients. Without working with someone who has experience filing these settlements for people with financial situations similar to yours, it’s hard to know what your chances of approval will look like. That means more than just finding a professional for advice, it means finding one whose service is built around people like you, whether it’s individuals, businesses, freelancers, or any other niche.

Other Important Information

Submitting an Offer in Compromise does not automatically prevent the IRS from filing or maintaining a federal tax lien. In many cases, the IRS will continue to protect its interest by keeping an existing lien in place or filing one while the offer is being reviewed. However, while a processable offer is pending, the IRS is generally prohibited from issuing new levies, although existing levies are not automatically released.

Taxpayers who are already in an installment agreement may still submit an Offer in Compromise if they believe they cannot fully pay the liability before the collection statute expires. In many situations, the IRS will expect the taxpayer to remain current with the existing payment arrangement while the offer is under review.

What to Expect if Your Offer Is Accepted

Taxpayers should also understand that an Offer in Compromise is not a quick or automatic solution. In exchange for the IRS agreeing to settle a portion of the tax debt, the taxpayer is generally required to remain fully compliant going forward. This means all future tax returns must be filed on time and all taxes owed must be paid timely for the next five years after the offer is accepted. Failure to remain compliant during that period can result in the IRS defaulting the agreement and reinstating the forgiven balance.

Getting the Help, You Deserve with Your Tax Debt

It’s never a good idea to approach complex financial decisions without sound advice from people who really understand the choices you’re weighing. That’s why tax professionals are there, to give you the resources to reach the best possible understanding with the IRS. If you need help negotiating and offer in compromise for the last tax year or for any preceding years, contact Anthem Tax Services today to find out how you can settle all your outstanding tax debt.