Offer in Compromise Success Stories
Although the IRS rejects the majority of offer in compromise submissions it receives, we’ve had a nearly 100% success rate with our offer in compromise submissions, and we are pleased to share some of the amazing results we’ve achieved for our clients below.
Names have been changed to protect the identity of our clients.
Want to learn more about the offer in compromise process?
Check out our article on offer in compromise examples, where we take you through the actual forms, documentation, and processes that go into a successful offer in compromise submission.
Table of Contents
Offer in Compromise Success Story #1: $89,189 Settled For $2,097
Taxpayer’s Location: Brooklyn, New York
Taxpayer’s Original Debt: $89,189
Taxpayer’s Settled Debt: $2,097
Our first offer in compromise success story comes from an individual — let’s call him “Cooper” — who owed $89,189 to the IRS for tax years 2013-2017.
What’s interesting about this individual is that he:
- Had an income in excess of $200,000 per year
- Had previously submitted an offer in compromise through another company back in 2018 that got rejected
So these two things would obviously make it an uphill battle for us to get Cooper’s offer in compromise accepted, and it was an uphill battle that lasted — from our initial contact with Cooper all the way through our negotiations with the IRS and finally to offer in compromise acceptance — over a year and a half.
Our initial offer was rejected; so we had to appeal that rejection; and that’s why it took a bit longer than most offers to get approved.
I will now take you through our journey with Cooper’s offer in compromise, including the appeal, so that you can understand what an offer in compromise looks like, from soup to nuts.
Initial Situation: $89,189 Owed
Here’s this individual’s initial email to us:
At this point, we got on the phone with Cooper to determine that he could actually qualify for an offer in compromise, taking him through the financial analysis that I have discussed at length in this article on the offer in compromise formula.
We did not know for sure whether Cooper would qualify, especially with his high income and the fact that he had fairly recently submitted an offer in compromise that was rejected, and we let Cooper know that:
- we were going to get him in the best possible resolution with the IRS that we could
- we thought he had a fairly good chance of getting an offer in compromise accepted, and we would appeal any rejection, but that
- he should prepare for the fact that maybe at the end of it the best we could do is place him into an installment agreement because offers in compromise are far from guaranteed, especially given Cooper’s high income and previous offer in compromise rejection
Cooper understood, and he retained us to represent him before the IRS in this matter to get him into a resolution.
Initial Offer in Compromise Submission
So the reason why Cooper had any chance at an offer in compromise on $90,000 of tax debt with a $200,000 income is because:
- Cooper lived in Brooklyn in New York City — this helped him because for certain expenses such as your housing expenses and your vehicle operating expenses the IRS allows you to claim higher amounts for those expenses (to the extent they’re actually paid) in high cost of living areas, and Brooklyn is one of the highest cost of living areas in the country
- Cooper had several dependents living with him in Brooklyn, New York, who were not earning income themselves and depended on his income to survive; these individuals included Cooper’s wife, mother-in-law, and several children. I believe he had three or four dependents in total that we ended up claiming on his offer in compromise paperwork.
So we gathered all this information from Cooper about his financial information and put it on a Form 433-A (OIC).
Receipt of the Processability Letter
Since our offer was prepared correctly, and a down payment was attached, the IRS deemed our offer processable and sent the taxpayer a processability letter, signed by the process examiner who reviewed the offer, reading as follows:
“We received your Offer in Compromise.
You will be contacted by 3/11/2023.
If you receive collection notices while your offer is pending, please contact the number on this letter.
“While investigating your offer, we will determine whether a notice of federal tax lien should be filed in order to protect the government’s interests.
If you disagree, you may ask the Service not to file the notice of federal tax lien.
Please read the enclosed publications regarding the types of appeal available.
If we determine to file a notice of federal tax lien we will provide you with notification within five days of the filing.
You will have the opportunity to request a hearing with Appeals at which you may propose alternative methods for protecting the government’s interest.
“If you receive collection notices while your offer is pending, contact the number on this letter.
“If you have nay questions, please contact the person whose name and telephone number are shown in the upper right hand corner of this letter.”
This letter does not mean the IRS has accepted the offer in compromise; it simply means that the IRS has deemed it processable and able to be reviewed by an offer examiner or an offer specialist.
Receipt of the Letter 6120C
After receiving the processability letter, we didn’t hear anything from the IRS regarding this offer for some time — of course, this was completely expected given how long offers in compromise take.
But a little after four months after submitting the offer, we received the Letter 6120C from the Brookhaven IRS Center Centralized Offer in Compromise Unit in Holtsville, NY.
You can click here to read the entire letter, but here’s the gist:
- An IRS offer examiner would contact us within 90 days from the date of the letter with their decision on the offer
- The IRS has suspended taking collection action against the taxpayer while it evaluates the offer we submitted
- If we had submitted a periodic payment offer in compromise — which we did not — the taxpayer would be required to continue to make monthly payments while the IRS considers the offer
- The taxpayer is required to continue to file and pay their taxes on time while the IRS is reviewing the offer (this includes estimated tax payments and federal tax deposits)
Offer in Compromise Transferred to the Field
A few weeks after sending the Letter 6120C, the IRS sent us a letter informing us that the offer had been transferred to the IRS field office in Savannah, Georgia.
On this letter we learned the name of the offer specialist that would review and make a decision on the offer — D. Clegg — who the letter informed us would contact us within the next 45 days.
Although we don’t always know exactly why an offer is transferred from the Central Offer in Compromise (COIC) office the offer was initially sent to to a Field Offer in Compromise (FOIC) office, we do know that offers that the IRS deems as “more complex” are transferred to an FOIC.
IRS’s Preliminary Conclusion to Reject
Some time later, Leah McLaughlin, the enrolled agent in my office working the case, was contacted by the IRS offer specialist, D. Clegg.
Ms. Clegg informed Leah that she was proposing to reject the offer, communicating to her that she is proposing a monthly installment agreement of $2,108 instead.
Ms. Clegg sent Leah her Income/Expense Table (IET) and Asset/Equity Table (AET), showing her calculation of Cooper’s ability to pay.
Note that this faxed correspondence was dated in late July, and this commenced a five-month battle between my office and the IRS offer specialist.
In our mind, by this point, the client clearly qualified for an offer in compromise, and we made this argument to the IRS offer specialist every which way.
Nevertheless, the IRS offer specialist and her manager issued a rejection letter in December.
IRS’s Offer in Compromise Rejection Letter
In December, the IRS offer specialist and her manager sent us a copy of the letter they sent the taxpayer rejecting the offer in compromise.
Along with the rejection letter, they also provided their Income/Expense Table and Asset/Equity Table showing what they believe Mr. Cooper could pay.
The assets and equity weren’t really a problem; however the IRS’s calculation of Mr. Cooper’s disposable income on their Income/Expense Table was much higher than our calculation of his disposable income.
| Gross Wages | $17,450 | $15,984 |
| Food, Clothing, & Miscellaneous | ($2,244) | ($1,993) |
| Housing and Utilities | ($2,661) | ($0) |
| Vehicle Loan and/or Lease Payment(s) | ($827) | ($629) |
| Vehicle Operating Costs | ($406) | ($379) |
| Public Transportation Costs | ($242) | ($242) |
| Health Insurance Premiums | ($282) | ($0) |
| Out-of-Pocket Health Care Costs | ($375) | ($319) |
| Court-Ordered Payments | ($991) | ($0) |
| Child/Dependent Care Payments | ($4,000) | ($4,000) |
| Current Monthly Taxes | ($5,492) | ($6,086) |
| Total Household Expenses | ($17,520) | ($13,648) |
| Remaining Monthly Income | $0 | $2,336 |
The IRS’s offer specialist and her manager were clearly either asleep at the wheel or had no idea how offers in compromise work because:
- They disallowed the taxpayer’s housing expenses, despite us providing the offer specialist with credit card statements showing the lease payment as well as the taxpayer’s lease agreement
- They did not give credit to the number of people in the taxpayer’s household for the taxpayer’s new child, despite the fact that we provided to the offer specialist information regarding the child, including Social Security number
- They disallowed the taxpayer’s child support payment, despite it being court ordered and us providing the offer specialist with the court order
There were some other things wrong as well, but we basically knew at this point that we were dealing with idiots at the IRS — no surprises there; it’s not like the IRS hires the best and the brightest — and we naturally decided to appeal the rejection.
Our Appeal of the Offer in Compromise Rejection
On December 28 — before the 30-day deadline to appeal the offer in compromise rejection — we faxed our Form 13711 “Request for Appeal of Offer in Compromise” to the fax number on the offer in compromise rejection letter.
Here is a list of all our disagreed items on the Form 13711, which formed the basis of our appeal:
| National Standard | The household contains a total of six people. The 2022 tax return and the birth certificate for the child born in 2023 are attached. Please increase to $2,705. |
| Housing and Utilities | No amount was allowed for housing and utilities. Please increase the expense to $3,229. A copy of the lease and credit card statements that show proof of payment for housing and utilities are attached. |
| Court-Ordered Payments | Taxpayer is required to pay court-ordered child support of $991. A copy of the court order and proof of payment are attached. |
| Out-of-Pocket Healthcare | Please increase to $474 to allow for six people. |
| Bank Accounts | The taxpayer has $3,097 in their checking account, and his allowable living expenses are in excess of this amount. Therefore, no amount should be indicated on the AET. |
Further Negotiations With an Amended Offer
Within a couple months, our enrolled agent Leah had negotiated a final offer amount with the IRS of $2,097 and submitted an amended offer to the offer specialist using Form 656.
Offer in Compromise Acceptance in the Amount of $2,097!
Then, in late March, we received this envelope at our office:
Inside, was an offer in compromise acceptance letter!
Offer in Compromise Success Story #2: $10,447 Settled For $200
Taxpayer’s Location: Spokane, Washington
Taxpayer’s Original Debt: $10,447
Taxpayer’s Settled Debt: $200
“Tom” came to us with a relatively small tax debt of $10,447.
Now, the IRS tried to return this offer to us as unable to be processed — but we were able to shut this argument down and get the offer pushed through (more on that later).
Initial Offer in Compromise Submission
On September 11, we submitted our offer in compromise for Tom.
Because Tom qualified for the low-income certification, he did not need to submit any down payment or application fee in the offer package.
Our 433-A (OIC) was fairly straightforward, reporting only $11.17 in cash in a credit union account and a 2012 GMC Sierra with 200,000 miles on it and a fair market value of $4,465; after running some calculations in favor of the taxpayer, we reported only $122 in assets includible in the taxpayer’s offer amount.
As far as income was concerned, we only reported Tom’s monthly disability benefit of $450 per month; the national standard for food, clothing, and other miscellaneous items alone eliminated this amount, leaving Tom with no monthly disposable income for offer in compromise purposes.
Therefore, we rounded up the available assets of $122 to $200 for an even offer amount.
Offer in Compromise Recommended for Acceptance
Then, on January 30, our tax attorney Andrea Coins received a fax from our client’s offer examiner with the following message:
“I received all the requested information for Mr. Tom. The offer is being recommended as an acceptance. Have a nice day!”
We were thrilled and told our client!
Of course, this fax was just an informal notification from the offer examiner; we still had to receive the official offer in compromise acceptance letter from the Centralized Offer in Compromise Unit.
Offer in Compromise Acceptance Letter
And that letter came in the mail shortly thereafter with these words:
“We have accepted the offer in compromise you signed and dated on 9/11/2024.”
We were thrilled to share the news with our client that we had successfully settled his $10,447 of tax debt for only $200!
Free Consultation
Owe the IRS? Don’t wait for their next move.
Talk to a tax expert — free, no obligation. We’ve resolved over $20 million in IRS debt for our clients.
Call 866-8000-TAXOffer in Compromise Success Story #3: $194,212 Settled For $20
Taxpayer’s Location: Houston, Texas
Taxpayer’s Original Debt: $194,212.36
Taxpayer’s Settled Debt: $20.00
Yes, you read that right. Twenty dollars — roughly the cost of a large pizza — to wipe out almost two hundred thousand dollars of IRS debt. That is one one-hundredth of one percent of what the IRS said our client owed.
And here’s the part that makes this case worth reading all the way through: the IRS did not make it easy. They returned our first offer claiming we never paid the application fee (we did — we’ll show you the money orders). They sent our client a passport letter. And while his second offer was pending, they garnished his paycheck — which they’re not supposed to do — and we got that levy released in 15 days.
Let us walk you through the whole thing, document by document.
How “Dave” Ended Up $180,000 in Debt to the IRS
In 2016, “Dave” — a Houston man in his 60s — cashed out roughly $305,000 from his retirement account, followed by another $14,700 the next year. Retirement distributions are taxable income, the withholding didn’t come close to covering the bill, and the IRS assessed the difference. Dave couldn’t pay it.
By the time Dave came to Choice Tax Relief, that unpaid 2016 bill had been compounding for eight years. Of the roughly $175,000 the IRS said he owed for 2016 alone, over $60,000 was interest. Add a smaller 2017 balance and the total stood at $180,589.05.
Meanwhile, Dave’s actual life looked like this: a W-2 job at H-E-B, the Texas grocery chain, earning $21.25 an hour. A small pension paying $323.83 a month. About $75 in the bank. No house — he paid rent. He’d liquidated his last $3,170 of stock just to start paying for representation, and later took out a $5,000 personal loan to finish. This is what the IRS calls a taxpayer with essentially no reasonable collection potential — exactly who the offer in compromise program exists for.
February 2025: The IRS Sends Its Final Warning
What finally brought Dave in was IRS Notice LT11 — “Notice of intent to levy and notice of your right to a hearing” — dated February 4, 2025, demanding $180,589.05.
IRS Notice LT11 — the final notice of intent to levy (click to enlarge)
The LT11 is the IRS’s statutory final notice before it can legally seize wages, bank accounts, and property. Ten days later, Dave signed with us. Within a week, our team was on the phone with IRS collections: power of attorney faxed and accepted, a collection hold secured, and full account transcripts pulled — confirming balances of $175,326.44 for 2016 and $5,064.94 for 2017, liens on both years, and no missing returns.
The Math: Why We Offered the IRS Almost Nothing
An offer in compromise isn’t a negotiation over how sad your story is. It’s arithmetic. The IRS computes your reasonable collection potential (RCP): the equity in your assets, plus your monthly disposable income times a multiplier. If your RCP is less than your debt, the IRS can — and generally will — accept the RCP instead of chasing money that doesn’t exist.
Here’s Dave’s arithmetic from the Form 433-A (OIC) we filed. His total monthly income of $3,865.48 (wages plus pension) sat below the IRS-allowed living expenses for his household of roughly $5,590 — leaving zero disposable income. His assets: about $15 in checking, $308 in a 401(k), and a $5,173 employee stock plan he could not borrow against or cash (a forfeitable annuity). Reachable equity: effectively zero.
The Form 433-A (OIC) asset page — about $15 to his name, no reachable equity (click to enlarge)
So our first offer, submitted May 12, 2025, was a nominal lump sum, sent with the $205 application fee and the required 20% initial payment by money order. On May 24, 2025, the IRS confirmed the offer was processable:
“We received your Offer in Compromise. You will be contacted by 09/21/2025. If you receive collection notices while your offer is pending, please contact the number on this letter.”
The IRS confirms the offer is processable (click to enlarge)
So far, so good. Then the IRS started IRS-ing.
Round One: A Three-Day Deadline and a Returned Offer
On July 20, 2025, the offer unit mailed a Letter 2844 requesting additional financial information — with a response deadline of July 23. Three days after the letter was dated. Dave received it on July 24: the day after the deadline had already passed. We pulled the requested items together anyway.
IRS Letter 2844 — dated July 20, due July 23 (click to enlarge)
Then on September 16, 2025, the IRS returned the offer entirely. Their stated reason?
“We have closed our file on your offer and are returning your Form 656, Offer in Compromise for the following reason(s): You did not submit the $205 application fee nor any required initial payment… We have determined that you do not qualify for low income certification.”
The IRS returns the offer (click to enlarge)
The $205 application fee and $40 initial payment — both paid, both cashed (click to enlarge)
We had the money orders. Purchased May 2, 2025, sent by certified mail, delivered May 8. The IRS returned an offer for non-payment of a fee that was sitting in their own lockbox.
Kicking Him While He Waited
With the offer returned, Dave’s account went straight back into the collection machine. September 2025 was a pile-on: a CP504 for 2016 demanding $181,686.94, a CP504 for 2017 for $5,245.52, and a passport-certification letter.
IRS Notice CP504 for 2016 — $181,686.94 (click to enlarge)
IRS Notice CP504 for 2017 — $5,245.52 (click to enlarge)
We rebuilt the entire package with fresh financials and resubmitted on September 24, 2025 — this time with an offer of exactly $20: a $4 initial payment (the required 20%) and $16 due on acceptance. On November 1, 2025, the IRS again confirmed processability:
“We received your Offer in Compromise. You will be contacted by 03/02/2026.”
The IRS confirms the second offer is processable — contact by 03/02/2026 (click to enlarge)
Hold that date in your head.
March 2, 2026: The IRS “Contacts” Him — With a Wage Levy
On exactly March 2, 2026 — the very date by which the IRS said Dave would be “contacted” about his pending offer — the IRS issued Form 668-W: a continuous levy on his wages at H-E-B, for $194,212.36. Four days later, H-E-B’s payroll department handed him the notice.
The IRS wage levy — $194,212.36, issued while the offer was pending (click to enlarge)
The notice H-E-B payroll handed the client at work (click to enlarge)
A wage levy while an offer in compromise is pending is improper. IRC Section 6331(k) bars levy action while a processable offer is under review, and the IRS’s own November 1 letter acknowledged the pending offer. Our team went straight at it. By March 9, the IRS issued Letter 6120C confirming the offer was pending and collection was suspended. And on March 17, 2026 — 15 days after the levy issued — the IRS faxed Form 668-D, Release of Levy, to H-E-B’s payroll department. Not one levied paycheck reached the IRS.
IRS Letter 6120C — the offer is pending, collection suspended (click to enlarge)
The IRS releases the levy — 15 days after it issued (click to enlarge)
But the IRS still wasn’t finished. On March 25, 2026 — just eight days after releasing the levy — the offer examiner sent yet another Letter 2844, saying they couldn’t continue processing the offer without additional financial information, and giving Dave 10 days before they would return the offer again. We sent exactly what they asked for.
The IRS’s second Letter 2844 — more information demanded, 10-day clock (click to enlarge)
Twenty Dollars
After all of that — the returned offer, the levy, the release — the offer moved into final review. In May 2026, the offer examiner sent an amended Form 656 for Dave’s signature to finalize the file. He signed and returned it on May 19, 2026.
The Form 656 offer terms: $4 down, $16 balance — $20 total (click to enlarge)
The Form 656, signed and dated May 19, 2026 (taxpayer signature redacted) (click to enlarge)
Then, dated July 8, 2026, IRS Letter 5483 arrived: offer accepted.
“We accepted the Offer in Compromise (offer) you signed and dated on 05/19/2026. The acceptance date is the date of this letter.”
IRS Letter 5483 — the acceptance (click to enlarge)
$194,212.36 of IRS debt, settled for $20 — $4 of which the IRS already had. Dave’s remaining obligation to close out a six-figure tax nightmare: a $16 money order, due by December 8, 2026. He now stays compliant for five years — file and pay on time — and the 2016-2017 liens get released.
What Made This Case Work
No magic. Three things. The math was real — Dave genuinely had no reasonable collection potential, and we documented it twice across 47 pages of statements and schedules. We didn’t let the IRS’s own mistakes stand — a returned offer over a fee that was actually paid, and an improper levy during a pending offer, either of which could have ended the case if nobody pushed back with the paper to prove it. And Dave stayed the course. Roughly a year and a half after that LT11, he settled for a twenty-dollar bill.
If you owe the IRS more than you could ever realistically pay, the offer in compromise program is not a myth. It’s a formula — and if your numbers fit it the way Dave’s did, the IRS can be made to say yes, even when they’ve already said no.
Call 866-8000-TAX for a free, no-obligation consultation, or fill out the form below to find out whether you might qualify.
This is a real Choice Tax Relief client case. Names have been changed to protect the identity of our clients, and all documents shown are redacted. Results are not typical and are no guarantee of your outcome — the IRS rejects the majority of offer in compromise submissions nationwide, and acceptance depends entirely on your specific financial circumstances. Choice Tax Relief maintains a nearly 100% success rate with our offer in compromise submissions because we only submit offers for clients who we believe qualify.
“I was quite skeptical at first, but wow, did Choice Tax Relief deliver in reducing my taxes. I owed very close to $50,000, and after their great work, I now owe the IRS less than $5,800. Folks, trust me — they really deliver beyond what I ever expected.”
Get Help Now
Owe the IRS? Don’t wait for their next move.
Talk to a tax expert — free, no obligation. We’ve resolved over $20 million in IRS debt for our clients.
Call 866-8000-TAX
Author:
Logan Allec, CPA, Founder and Owner
Logan Allec has been serving taxpayers as a CPA for over 14 years. After leaving his role at a "Big 4" firm, he started Choice Tax Relief to help everyday Americans who have found themselves behind on their taxes. He also educates thousands of people daily about tax relief on his YouTube channel. In addition to his CPA license, Logan also has a Master's Degree in Taxation from the University of Southern California (USC). He lives with his wife and children in the Los Angeles area. Learn more about Logan here.
