An IRS offer in compromise settles tax debt for less than you owe. The minimum the IRS will consider is your Reasonable Collection Potential — net asset equity plus future income. Enter your numbers to estimate your offer.
🤝 Your Financial Position
💰 Your Minimum Offer
Net Asset Equity$5,000
Future Income Component$4,800
Reasonable Collection Potential$9,800
Savings vs Full Debt$30,200
Offer Percentage of Debt25%
📊 Worked Examples
Scenario
Net Equity
Monthly Cash Flow
Min Offer
Lump sum, $40k debt, some equity
$5,000
$400
$9,800
Periodic payment, no equity
$0
$300
$7,200
Lump sum, no disposable income
$2,000
$0
$2,000
The IRS computes a minimum acceptable offer from Reasonable Collection Potential (RCP): the net equity in your assets plus future income. The future-income multiple is 12× monthly disposable income for a lump-sum offer and 24× for a periodic-payment offer.
📖 How an IRS Offer in Compromise Works (Form 433-A)
An Offer in Compromise (OIC) lets a taxpayer settle a federal tax debt for less than the full amount owed. The IRS accepts an offer only when the amount offered is the most it can reasonably expect to collect — measured by your Reasonable Collection Potential (RCP).
Key rules
RCP = net asset equity + future income. Net realizable equity is what you could sell assets for, minus selling costs and any exempt portion. Future income is monthly disposable income multiplied by 12 (lump sum) or 24 (periodic).
Payment structures: a lump-sum cash offer is paid in five or fewer installments within five months and uses the 12× multiple. A periodic-payment offer is paid within 24 months and uses the 24× multiple — which makes it larger, so it is best used only when you cannot pay the lump sum.
Application fee: $205 (waived for low-income taxpayers), plus an initial payment. For a lump-sum offer, include 20% of the offer; for a periodic offer, include the first monthly payment.
Compliance: you must be current on filing and estimated taxes for the current year, and not in an open bankruptcy, to qualify.
Not guaranteed: submitting an offer does not stop collection activity or the running of interest and penalties until it is accepted.
Alternatives: if RCP exceeds your debt, an OIC will be rejected — consider a payment plan, partial-pay installment agreement, or Currently Not Collectible status instead.
How to use it
Enter your total tax debt, the net equity in your assets, and your monthly disposable income, then choose the payment structure. The calculator returns the minimum offer the IRS is likely to consider, your savings versus paying in full, and the offer as a percentage of the debt.
Frequently Asked Questions
How is the minimum offer amount calculated?
The IRS starts from your Reasonable Collection Potential: the net realizable equity in your assets plus future income. Future income is your monthly disposable income times 12 for a lump-sum offer or times 24 for a periodic-payment offer.
What is the difference between a lump-sum and periodic-payment offer?
A lump-sum cash offer is paid in five or fewer payments within five months and multiplies future income by 12. A periodic-payment offer is paid within 24 months and multiplies by 24, so the minimum offer is generally higher.
Does an offer in compromise stop IRS collection?
While an offer is pending, the IRS generally suspends most collection activity, but interest and penalties continue to accrue until the offer is accepted or rejected. A rejected offer resumes collection.
How much does it cost to apply?
The application fee is $205, though it is waived for low-income taxpayers. You must also include an initial payment — 20% of a lump-sum offer, or the first monthly payment of a periodic offer.
Will the IRS accept my offer?
The IRS accepts an offer when it represents the most it can reasonably collect. If your RCP is close to or above the full debt, an offer will likely be rejected and a payment plan may be the better path.
⚠️ Important: This calculator estimates a minimum offer using the IRS RCP formula (net equity + future income × 12 or 24). Actual offers depend on allowable expense standards, exemptions, and IRS discretion, and require Form 433-A (OIC). This is an educational estimate only — consult a licensed tax professional before filing an offer.