Check whether you meet the IRS requirements to apply for an Offer in Compromise (IRC §7122), then estimate your "reasonable collection potential" — the minimum offer the IRS generally expects — using the same steps as Form 433-A (OIC) and the IRS Collection Financial Standards.
IRS Standards effective June 29, 2026 · Form 656-B Rev. 4-2026Per Form 656-B (Rev. 4-2026), the IRS will return an offer without considering it if any of these are not met. Check each statement that is true for you.
| Offer calculation (Form 433-A OIC, Sec. 8) | Amount |
|---|---|
| Box A — Personal equity in assets | |
| Box B — Business equity in assets | |
| Box D — Total monthly household income | |
| Box E — Allowable monthly expenses | |
| Box F — Remaining monthly income | |
| Box G — Future income, lump sum (× 12) | |
| Box H — Future income, periodic (× 24) | |
| Your minimum offer | |
| Tax debt | |
| Potential amount forgiven |
| What you pay with the application | Amount |
|---|---|
| Low-Income Certification | |
| Application fee | |
| Initial payment | |
| Due when you apply | |
| Remaining balance |
| Allowable expenses | You entered | IRS allows |
|---|
| Asset equity (quick sale value) | Counted |
|---|
| Full-payment test (IRM 5.8.4 / 5.8.5) | Amount |
|---|---|
| Equity in assets (without the $1,000 / $3,450 allowances) | |
| Remaining monthly income × months left to collect | |
| What the IRS could collect before the deadline |
New to Offers in Compromise? Read our plain-English guide first: Can I Settle My IRS Debt for Less? Offer in Compromise Basics.
IRC §7122 authorizes the IRS to settle a tax debt for less than the full amount. Under Treas. Reg. §301.7122-1(b) there are three grounds: doubt as to liability (you dispute the tax — Form 656-L), doubt as to collectibility ("the taxpayer's assets and income are less than the full amount of the liability"), and effective tax administration (you could pay, but doing so would cause economic hardship, or there are compelling public-policy/equity reasons). This calculator estimates a doubt as to collectibility offer — by far the most common type.
The checklist follows the "What you need to know" section of Form 656-B, Offer in Compromise Booklet (Rev. 4-2026): all required returns filed, a bill received for at least one debt in the offer, current-year estimated payments made, federal tax deposits made for the current and two preceding quarters (business owners with employees), no open bankruptcy, open audits and innocent spouse claims resolved first, no deactivated ITIN, and no debts referred to the Department of Justice, reduced to judgment, or assessed as restitution. After acceptance you must stay compliant for five years or the offer can be defaulted.
The IRS generally accepts an offer that equals or exceeds your RCP (IRM 5.8.4, IRM 5.8.5). Following Form 433-A (OIC), Section 8:
IRC §7122(d)(2) requires the IRS to publish national and local expense allowances. The standards used here come from the IRS Collection Financial Standards page:
| National Standards (monthly) | 1 person | 2 persons | 3 persons | 4 persons |
|---|---|---|---|---|
| Food | $496 | $893 | $1,073 | $1,278 |
| Housekeeping supplies | $44 | $85 | $94 | $95 |
| Apparel & services | $98 | $175 | $211 | $249 |
| Personal care | $54 | $90 | $104 | $118 |
| Miscellaneous | $175 | $315 | $375 | $436 |
| Total | $867 | $1,558 | $1,857 | $2,176 |
Before evaluating an offer, the IRS checks whether you can pay the full debt through an installment agreement over the remaining collection period, from equity in assets, or both (IRM 5.8.5.2). If you can, a doubt-as-to-collectibility offer will generally not be accepted — and the $1,000 bank and $3,450 vehicle allowances are not applied. The IRS also adds projected interest and penalties to the balance, which this tool does not.
The application fee is $205. A lump-sum offer must include 20% of the offer amount, with the rest paid within 5 months of acceptance; a periodic offer must include the first monthly payment, and you must keep paying monthly while the IRS evaluates it (IRC §7122(c)). Under IRC §7122(c)(3), individuals whose AGI — or household gross monthly income × 12 — does not exceed 250% of the federal poverty guidelines pay no fee and no payments while the offer is pending:
| Family size | 48 states, D.C. & territories | Alaska | Hawaii |
|---|---|---|---|
| 1 | $39,900 | $49,875 | $45,900 |
| 2 | $54,100 | $67,625 | $62,225 |
| 3 | $68,300 | $85,375 | $78,550 |
| 4 | $82,500 | $103,125 | $94,875 |
| Each additional person | +$14,200 | +$17,750 | +$16,325 |
If the IRS does not decide on your offer within 24 months of submission, it is deemed accepted (IRC §7122(f)). Penalties and interest keep accruing while the offer is pending, and the IRS can keep any refund for tax periods before acceptance.
This calculator gives a simplified estimate for planning purposes only — it is not a final calculation and not a guarantee that the IRS will accept any offer. The IRS verifies every figure, may value assets and income differently, may disallow expenses or add dissipated assets, and adds accrued interest and penalties. Many cases are better resolved with an installment agreement, currently-not-collectible status or penalty relief. Calculator created October 4, 2026 — figures reflect the IRS Collection Financial Standards effective June 29, 2026 and Form 656-B (Rev. 4-2026); always verify current numbers at irs.gov before applying.
