Owed the IRSTax debt
Settling Tax Debt for Less: The IRS Explains the Offer in Compromise
The IRS explains the offer in compromise, which lets some taxpayers settle tax debt for less than they owe, and points out that companies advertising it don't mention taxpayers can apply directly. It walks through the Pre-Qualifier tool and what it asks for.
Video by IRSvideosPublished June 4, 2026Breakdown updated September 15, 2026
“Looking to Settle for Less with the IRS?” by IRSvideos. We didn't make this video; it loads from YouTube when you press play.
What the video covers
This IRS video responds to ads from companies that say they can settle tax debt for less. It explains what an offer in compromise is, who it's meant for, and how taxpayers can check their eligibility on their own.
The steps it walks through
- 1
Check first whether the full balance could be paid through a payment plan; the IRS calls an offer a last resort after other options.
- 2
Know that an offer can be submitted directly to the IRS without a third-party company.
- 3
Gather household size, total federal tax owed, assets, income and expenses, then use the OIC Pre-Qualifier Tool.
- 4
If the tool shows possible eligibility, follow its link to the application instructions closely; if not, the taxpayer can still submit an offer for consideration.
- 5
The IRS makes the final decision after a full financial review.
What you can learn from it
It's meant as a last resort
The IRS says an offer is for people who have exhausted other ways to pay in full, including payment plans. Someone who qualifies for a payment plan may not qualify for an offer.
No middleman is required
The video says companies advertising tax settlements often don't mention that taxpayers can submit an offer themselves.
Know the application cost
The IRS lists a $205 nonrefundable application fee plus an initial payment, and low-income applicants don't have to send either one.
Get current on filings first
To be eligible, the IRS says a taxpayer must have filed all required returns, made required estimated payments, and not be in an open bankruptcy proceeding.
The tool is only a guide
The Pre-Qualifier doesn't consider special circumstances, and the IRS makes the final call based on the completed application.
In their words
“It's a last resort for those who have exhausted other available options to pay their debt in full, including payment plan options.”
“you don't need to go through them to make the offer.”
Keep in mind
An offer isn't an option for everyone, and the IRS weighs each person's ability to pay, income, expenses and asset equity. For a specific situation, a tax professional or the IRS itself can help.
Watch out: Be wary of firms promising to settle tax debt for pennies on the dollar.
See tax debt optionsCommon questions
What is an IRS offer in compromise?
The IRS says an offer in compromise allows a taxpayer to settle tax debt for less than the full amount owed. It looks at ability to pay, income, expenses and asset equity.
Source: irs.govHow much does it cost to apply for an offer in compromise?
The IRS lists a $205 nonrefundable application fee plus an initial payment. Applicants who meet the low-income guidelines don't have to send the fee or the initial payment.
Source: irs.govWho is eligible to apply for an offer in compromise?
The IRS says applicants must have filed all required tax returns and made all required estimated payments, and can't be in an open bankruptcy proceeding.
Source: irs.govSources
By DebtCheckUSAEditorial Team. This is our summary of a video we didn't make, and nobody paid us to include it. It's one person's experience, not financial, tax or legal advice. Advertiser disclosure
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