Offer in Compromise: Are “Pennies on the Dollar” Really Possible?
If you owe the IRS $100,000, can you really settle your tax debt for $10,000?
You've probably seen the advertisements:
“Settle your IRS tax debt for pennies on the dollar!”
It's one of the most common claims in the tax relief industry.
And while an Offer in Compromise (OIC) can allow a qualifying taxpayer to settle IRS tax debt for less than the full amount owed, there's a lot more to the story.
Yes, the IRS Can Accept Less Than You Owe
An Offer in Compromise is a legitimate IRS program.
The IRS may accept an offer when a taxpayer cannot reasonably pay the full tax liability or when collecting the full amount would create certain economic or equitable hardships.
The IRS considers factors including:
Income
Allowable living expenses
Bank accounts
Real estate
Vehicle equity
Investments
Other assets
Future ability to pay
The IRS generally uses these factors to calculate Reasonable Collection Potential (RCP). In most cases, an offer needs to reflect what the IRS believes it can reasonably collect.
So, yes, a taxpayer could potentially settle a $100,000 liability for substantially less than $100,000.
But there is no automatic “10 cents on the dollar” program.
OIC Acceptance Rates Have Changed
This is where things get interesting.
Historically, OIC acceptance rates were considerably higher than they are today.
For example, IRS data shows that 28.5% of OICs were accepted in fiscal year 2023.
That dropped to 21.3% in 2024 and then to 15.6% in 2025.
At the same time, the number of OICs being submitted increased:
FY2023: 30,163 offers submitted
FY2024: 33,591 offers submitted
FY2025: 38,797 offers submitted
In FY2025, the IRS accepted only 5,464 offers.
That's a significant change.
And it raises an important question:
Why are more people submitting OICs while a smaller percentage are being accepted?
There isn't one simple answer.
One possibility is that more taxpayers now have access to online information, IRS tools, software, and artificial intelligence that can help them prepare forms and calculate a preliminary offer.
AI can be useful.
It can explain terminology.
It can help organize information.
It can help someone understand what Form 433-A (OIC) is asking for.
But there's a major difference between filling out an OIC form and building a defensible tax resolution case.
AI Can Help With the Forms. It Doesn't Represent You.
Today, someone can ask an AI tool:
“How do I file an Offer in Compromise?”
They can receive an explanation of the forms, calculations and general process within seconds.
The IRS also provides taxpayers with its own Offer in Compromise Pre-Qualifier Tool to help determine whether they may qualify and calculate a preliminary proposal. But the IRS specifically says that using the tool does not guarantee acceptance.
That's an important distinction.
An OIC isn't simply a form-filling exercise.
The IRS is looking at your complete financial picture.
What happens if you value an asset incorrectly?
What happens if you misunderstand allowable expenses?
What happens if you leave out information?
What happens if the IRS disagrees with your calculations?
What happens if an OIC isn't actually the best resolution strategy for your situation?
Those are the areas where professional representation can make a difference.
The Numbers Tell an Important Story
The decline in acceptance rates doesn't prove that AI or do-it-yourself filing is the reason more OICs are being rejected.
But the trend is worth paying attention to.
More people are submitting offers.
Fewer are being accepted as a percentage of submissions.
And taxpayers now have more tools than ever to attempt the process themselves.
The lesson isn't:
“Don't use AI.”
The lesson is:
“Don't confuse information with representation.”
AI can give you information.
An IRS tax professional can analyze your circumstances, help develop a strategy, prepare the required financial information, communicate with the IRS, and represent you when appropriate.
What About the Old 40% Acceptance Rate?
You may hear tax professionals talk about OIC acceptance rates being above 40% in the past.
There is some historical context behind that number.
A Taxpayer Advocate Service report discussing the OIC program cited a 42% acceptance rate when taxpayers provided all the information the IRS needed to fully investigate the offer in a particular historical analysis.
That is very different from saying:
“42% of everyone who filed an OIC got approved.”
It wasn't.
Acceptance statistics can vary depending on the year, the population being measured, and how the cases are categorized.
That's why taxpayers should be careful with anyone advertising a specific OIC success rate without explaining what the number actually represents.
“Pennies on the Dollar” Isn't the Strategy
Here's the biggest takeaway.
If someone owes the IRS $200,000, the goal shouldn't automatically be:
“How can I get the IRS to accept $20,000?”
The real question is:
“What does my financial situation support, and what resolution option is appropriate for me?”
For one taxpayer, an Offer in Compromise may be the right solution.
For another taxpayer, an installment agreement may make more sense.
Someone else might qualify for Currently Not Collectible status.
Another taxpayer may need penalty relief or another collection strategy.
The answer depends on the facts.
Don't Let an Advertisement Decide Your Tax Resolution Strategy
The IRS itself warns taxpayers about “OIC mills”—companies that aggressively promote Offers in Compromise to people who may not qualify. The IRS says these companies can make misleading claims and charge taxpayers significant fees.
That's why I don't believe in telling every taxpayer:
“We can settle your IRS debt for pennies on the dollar.”
Instead, the first question should be:
“Let's look at your financial situation and see what you actually qualify for.”
Lucha Tax Solutions — Oceanside, CA & Nationwide
I'm Benito Gonzalez, EA, owner of Lucha Tax Solutions in Oceanside, California.
I help taxpayers deal with IRS tax debt and tax resolution problems.
If you're in Oceanside, Carlsbad, Vista, San Marcos, North County San Diego, or anywhere else in the United States, you don't have to figure out your IRS problem alone.
An Offer in Compromise may be an option—but it isn't automatically the answer.
Don't chase “pennies on the dollar.”
Find out what your situation actually supports.
When you're ready to deal with the IRS...
Tag me in.
Contact Lucha Tax Solutions today to discuss your IRS tax resolution options.
For a confidential consultation:
Benito Gonzalez, EA
Lucha Tax Solutions
benito.g@luchataxsolutions.com
760-410-6787
