Offer in Compromise in Fort Lauderdale: Who Actually Qualifies to Settle IRS Debt

You have probably heard the ads: "Settle your IRS debt for pennies on the dollar." The truth is that an Offer in Compromise is real, it works, and we have used it for clients. But it only works for people who actually qualify. Here is how the IRS decides.

What is an Offer in Compromise?

An Offer in Compromise (OIC) is an agreement with the IRS to settle your tax debt for less than the full amount. You apply on Form 656 along with detailed financial forms, and the IRS reviews whether your offer is the most it can reasonably expect to collect from you.

The number that decides everything

The IRS calculates something called your Reasonable Collection Potential. In plain terms, it is:

• The equity in what you own (bank accounts, vehicles, real estate, retirement accounts, and other assets), plus
• Your future disposable income, meaning what is left each month after allowable living expenses, multiplied over a set number of months.

If your offer is at or above that number, the IRS will usually consider it. If your Reasonable Collection Potential is higher than what you owe, an OIC is generally not the right path, and a payment plan makes more sense.

Basic requirements

Before the IRS will even look at an offer, you generally need to:

• Have all required tax returns filed.
• Be current on estimated payments or withholding for this year.
• Not be in an open bankruptcy.
• Pay the application fee and initial payment, unless you meet the low income certification.

Who tends to qualify

Offers are usually accepted for people whose income and assets are truly limited compared to the debt: someone whose business closed, someone living mostly on fixed income, or someone whose expenses leave little room each month. Owing a large amount by itself does not qualify you. The math does.

Common mistakes

• Offering a random low number. The IRS will reject it.
• Filing with unfiled returns or missing estimated payments.
• Understating assets. The IRS checks.
• Paying a company that promises a specific result before reviewing your finances.

How PDJ Tax Experts helps

PDJ Tax Experts is an Enrolled Agent led firm based in Pembroke Pines, serving Fort Lauderdale and Broward County by phone and secure video. We run your Reasonable Collection Potential before you spend a dollar on an application, so you know whether an Offer in Compromise, an installment agreement, penalty abatement, or Currently Not Collectible status is the right fit.