Understand what the IRS collection formula counts
Start with your notice and a few financial records. This worksheet illustrates asset equity and future income under published IRS rules. It cannot tell you whether the IRS will accept an offer.
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Data version 2026.10. Official information last checked 2026-10-06.
Before you begin
An offer in compromise is a request to settle a tax debt for less than its full amount. The IRS reviews your circumstances and documents. Filing requirements, estimated payments, bankruptcy and other conditions matter even when a worksheet shows a small number. Start with the current Form 656-B booklet and IRS offer information.
Low-income note
Form 656 permits low-income certification using either AGI from the most recently filed federal return or current monthly household income multiplied by 12 against its applicable table. This worksheet shows which supplied test meets the published threshold and which remains unknown. Alaska and Hawaii use separate tables. Meeting a test may remove the application fee, initial payment and payments while the IRS reviews the offer; it does not settle the debt or establish that an offer will be accepted. Use the current Form 656-B.
DIY and when to get help
You can gather your own records and use the IRS's offer tools and Form 656-B. Consider an enrolled agent, CPA, tax attorney or Low Income Taxpayer Clinic before applying if you have a business, unusual assets, disputed tax, an approaching collection deadline or expenses above the standards. Review the provider's qualifications and fees.
DIY links
Questions you may have
Does this tell me what the IRS will accept?
No. It illustrates published worksheet rules using your entries. An actual offer requires an application, supporting records and IRS review. A displayed amount is not a settlement quote.
Is an offer just a percentage of my debt?
No. The IRS considers ability to pay, including assets, income and allowable expenses. A percentage discount chosen without those facts is not this worksheet's method. IRS offer overview
Can I use this if I rent or have a paid-off car?
Yes, where the relevant rules and inputs are verified. A renter has no home asset merely from paying rent. A paid-off car can have asset equity and operating expenses but no loan-payment allowance. Form 433-A (OIC)
Does a zero-income result mean collection stops?
No. Only the IRS can decide whether to delay collection. It can request documents about income, expenses and assets. Read the currently not collectible guide before discussing hardship with the IRS.
What does it cost to apply?
The published application fee is $205, with an initial payment determined by the offer's payment option. Low-income certification can change those payment requirements. Review the current form before submitting anything. IRS application instructions
Do I need to hire someone?
Not necessarily. You can use the IRS's own resources. Get individualized help when the facts or deadlines are difficult, and compare professional fees with the work you need. Paying a provider does not secure IRS acceptance.