How Much Will the IRS Settle For? Offer in Compromise Math
Last reviewed by Calculus Tax in-house Settlement Officer
The IRS generally will not accept an offer in compromise for less than what it calculates it could reasonably collect from you, called your reasonable collection potential. That is roughly your equity in assets plus your monthly disposable income multiplied by 12 for a lump-sum offer or 24 for a periodic offer. In fiscal year 2025, the IRS accepted 5,464 offers.
Quick answer
The IRS generally settles for no less than your reasonable collection potential: your equity in assets plus your monthly disposable income times 12 for a lump-sum offer or 24 for a periodic offer. There is no fixed percentage. In fiscal year 2025, the IRS accepted 5,464 offers worth $98.1 million, about $18,000 per offer on average.
| What the IRS expects | At least your reasonable collection potential |
|---|---|
| Future income multiplier | 12 months (lump sum) or 24 months (periodic) |
| FY2025 offers received | 38,797 (IRS Data Book, Table 4-1) |
| FY2025 offers accepted | 5,464, totaling $98.1 million |
| Average accepted offer | About $18,000 (our calculation) |
| Application | $205 fee plus first payment, unless low income |
The IRS Settles for What It Could Collect
The IRS says an offer in compromise may let you settle for less than the full amount if you cannot pay in full or doing so would cause financial hardship, and that it considers your income, expenses, and asset equity. It generally will not accept an offer if you can pay the debt in full through a payment plan and/or equity in assets.
Reasonable Collection Potential: The Basic Formula
The amount the IRS expects is your reasonable collection potential: the net equity in your assets plus your future disposable income. For a lump-sum offer, future income is generally your monthly disposable income times 12; for a periodic payment offer, times 24. Form 656-B, the Offer in Compromise Booklet, has the current worksheets.
Your Asset Equity
Equity is what your assets are worth minus what you owe against them. The IRS looks at assets such as bank accounts, vehicles, real estate, investments, and retirement accounts, all reported on its financial statements. Because equity counts toward the offer, the same income can lead to very different offer amounts depending on what you own.
Your Future Disposable Income
Disposable income is your monthly income minus allowable living expenses. The IRS limits many expenses to its Collection Financial Standards for food, housing, transportation, and health care, so your actual spending may not all count.
What IRS Data Shows
In the IRS Data Book for fiscal year 2025 (Table 4-1), the IRS received 38,797 offers in compromise and accepted 5,464, with accepted offers totaling $98.1 million. That works out to an average of about $18,000 per accepted offer, by our calculation. Offers received and accepted in the same year are not the same group of cases, so do not read the two numbers as a precise acceptance rate.
Check Eligibility With the IRS Pre-Qualifier
The IRS's free Offer in Compromise Pre-Qualifier Tool helps you check eligibility and prepare a preliminary offer. To apply, you must have filed all required returns, made required estimated payments, and not be in an open bankruptcy. Each application requires a $205 fee and a first payment (20% of the offer for a lump-sum offer) unless you meet the low-income qualifications.
When a Payment Plan Is the Better Answer
If your reasonable collection potential is close to what you owe, the IRS will expect full payment, and a payment plan is usually the realistic path. If you can pay something but not the full balance before the collection statute ends, a Installment Agreement" class="text-primary underline underline-offset-2 hover:text-primary/80">partial payment installment agreement may fit. Compare the options in payment plan vs. offer in compromise.
Be Wary of Pennies-on-the-Dollar Promises
The IRS warns about promoters who pressure you to pay for their services by promising to settle your debt for pennies on the dollar, and it notes you can apply for an offer in compromise directly. Calculus Tax runs the numbers from your IRS transcripts with Brevitax, and our in-house Settlement Officer tells you whether an offer is realistic before you pay for one. Contact us, or read what to do if an offer is rejected.
Frequently Asked Questions
What percentage will the IRS settle for?
There is no fixed percentage. The IRS generally expects at least your reasonable collection potential, which depends on your asset equity and future disposable income.
What is the minimum offer the IRS will accept?
Generally no less than your reasonable collection potential. If that is close to what you owe, the IRS will usually expect full payment instead.
How many offers in compromise does the IRS accept?
In fiscal year 2025, the IRS received 38,797 offers and accepted 5,464, totaling $98.1 million, according to the IRS Data Book.
Do I have to pay anything when I apply?
Yes, a $205 application fee and a first payment, such as 20% of a lump-sum offer, unless you qualify as low income.
Is there an IRS settlement calculator?
Yes. The IRS Offer in Compromise Pre-Qualifier Tool checks eligibility and helps prepare a preliminary offer.
How long does the IRS take to decide?
It varies. The IRS says an offer is automatically accepted if it does not accept or reject it within two years, not counting time in appeal.
What can change the answer
Notice type, issue date, filing history, account status, deadlines, and current agency procedures can change the available next step. Bring the complete notice and account records to a qualified review.
Tax rules and collection procedures can change and depend on the account. Federal claims should be checked against current IRS guidance; California claims should be checked against the California Franchise Tax Board. See our editorial methodology for sourcing and update standards.
Results depend on your facts and on IRS or state decisions. Calculus Tax, Inc. is not affiliated with the IRS or any government agency.
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