Offer in Compromise Calculator (2026)
The IRS settles tax debt for less than you owe when collecting the full amount is unrealistic. Whether that applies to you is arithmetic, not luck — this calculator runs the same formula the IRS uses.
How would you pay the offer?
Enter your debt and finances to see whether an offer is realistic.
Simplified estimate using the published IRS formula (Form 656-B). The IRS applies its own Collection Financial Standards to your expenses — run the official IRS pre-qualifier before relying on any number.
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Reviewed by Leonard Goldberg, Editor · Last updated
How the IRS Decides What It Will Accept
Every Offer in Compromise is judged against one number: your reasonable collection potential (RCP) — what the IRS believes it could collect from you through seizure and monthly payments. The published formula (Form 656-B): the net realizable equity in your assets, plus your monthly disposable income (income minus allowable living expenses under the IRS Collection Financial Standards) multiplied by 12 for lump-sum offers paid within five months, or 24 for offers paid over 6–24 months.
If your RCP is below your balance, the IRS is instructed to accept an offer at or above the RCP — paying a lump sum within five months therefore usually produces the lowest total, because only twelve months of disposable income count instead of twenty-four.
The "Fresh Start Program" — What It Actually Is
The most-searched phrase in tax relief is also the most misunderstood. Fresh Start is not an enrollment program — it is the name the IRS gave a series of collection-policy changes: streamlined installment agreements up to 72 months for balances under $50,000, more flexible OIC terms (the 12/24-month multipliers above replaced far harsher ones), higher thresholds before a federal tax lien is filed, and expanded penalty relief.
Ads promising to "enroll you in the Fresh Start Program" are selling preparation of these standard applications. That help can be genuinely valuable — the expense-valuation rules are where cases are won — but the programs themselves are open to everyone, directly.
If an OIC Is Out of Reach
- Installment agreement: monthly payment plan; streamlined approval up to 72 months for combined balances under $50,000, without full financial disclosure.
- Penalty abatement: first-time abatement removes failure-to-file and failure-to-pay penalties for taxpayers with a clean prior three years — often thousands of dollars, and frequently overlooked.
- Currently-not-collectible status: if paying anything would leave you unable to meet basic living expenses, collection pauses — the debt remains, but levies stop while your finances stay hardship-level.
Frequently Asked Questions
What is the IRS Fresh Start program?
"Fresh Start" is the umbrella name for IRS collection relief expanded since 2011 — not a single program you apply to. It covers streamlined installment agreements (up to 72 months without full financial disclosure for balances under $50,000), easier Offer-in-Compromise terms, higher lien-filing thresholds, and penalty relief. Companies advertising 'Fresh Start Program enrollment' are selling help with these standard IRS options.
How much will the IRS settle for in an Offer in Compromise?
The IRS accepts an offer when it equals or exceeds your "reasonable collection potential" (RCP): the net equity in your assets plus your monthly disposable income multiplied by 12 (lump-sum offers) or 24 (periodic offers). There is no fixed percentage of the debt — someone with no assets and no disposable income can settle a large balance for very little, while a high earner will not qualify at all.
How many Offers in Compromise does the IRS accept?
In recent years the IRS has accepted roughly a third of the offers submitted (IRS Data Book). Most rejections happen because the offer was below the calculated RCP or the taxpayer was not compliant with filing requirements — which is why running the numbers first matters.
What if I don't qualify for an Offer in Compromise?
The usual routes are an installment agreement (monthly payment plan — streamlined up to 72 months for balances under $50,000), penalty abatement (first-time abatement removes penalties for taxpayers with a clean three-year history), or currently-not-collectible status if paying anything would leave you unable to cover basic living expenses.
Does applying for an OIC stop IRS collections?
Generally yes — collection activity is typically suspended while the IRS evaluates a processable offer, and the collection statute clock pauses. Levies already in place don't automatically lift, and if the offer is rejected, collections resume.
Do I need a professional to file an Offer in Compromise?
No — the IRS provides Form 656-B and a free pre-qualifier tool. But the RCP calculation turns on how assets and allowable expenses are valued, where experienced practitioners routinely find legitimate reductions. For larger debts, a review before filing usually pays for itself; a rejected offer costs months.