Offer in Compromise Calculator
Last updated · Reviewed for accuracy against IRS.gov guidance
An Offer in Compromise generally has to equal your reasonable collection potential: the quick-sale equity in your assets plus monthly disposable income times 12 (lump-sum offer) or 24 (periodic offer). If that figure is close to or above what you owe, the IRS will usually expect a payment plan instead.
Your estimated RCP is below your balance, so an Offer in Compromise may be worth evaluating. This is not a settlement amount or a guarantee of acceptance.
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Get a free reviewHow the IRS evaluates an offer
Most offers are "doubt as to collectibility" offers: you're asking the IRS to accept less because it can't realistically collect the full balance before the 10-year collection statute runs out. To decide, the IRS calculates your reasonable collection potential (RCP) from Form 433-A (OIC). RCP has two parts:
- Net realizable equity in assets — usually 80% of fair market value (the quick-sale value) minus any loan secured by the asset, with some allowances.
- Future remaining income — your average monthly income minus allowable expenses, multiplied by 12 months if you'll pay the offer in five or fewer installments, or 24 months for a periodic offer paid over 6 to 24 months.
If your offer is at least your RCP and RCP is less than the balance, the offer is in the acceptable range. Read the full Offer in Compromise qualifications.
Why allowable expenses decide most cases
Disposable income isn't what you have left after your real bills — it's what's left after the expenses the IRS allows. Food, clothing and similar items are capped at the IRS National Standards for your household size; housing, utilities and vehicle costs are capped by county and region. Paying more than the standard doesn't count unless you can justify it. Our allowable living expenses worksheet builds this number from the current standards. A small change in allowable expenses multiplied by 12 or 24 months moves the result a lot.
Check with the official IRS pre-qualifier
Before filing, run the IRS Offer in Compromise Pre-Qualifier. You must be current on all filing and estimated payments, and can't be in an open bankruptcy. The application fee is $205 and the IRS keeps it and any payments made with the offer even if it's rejected. Many people who don't qualify for an offer can still use Currently Not Collectible status or a partial-payment installment agreement.
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Start the calculatorFrequently asked questions
What is reasonable collection potential?
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Reasonable collection potential (RCP) is the IRS's estimate of what it could collect from you: the quick-sale equity in your assets plus your future disposable income — 12 months for a lump-sum offer or 24 months for a periodic payment offer.
Does this calculator tell me what the IRS will accept?
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No. It's a rough screen. The IRS applies its own expense standards, valuation rules and judgment. No calculator can predict a settlement amount.
What does it cost to apply for an Offer in Compromise?
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The application fee is $205, plus an initial payment: 20% of the offer for a lump-sum offer, or the first proposed monthly payment for a periodic offer. Low-income applicants can have both waived.
Who should not apply for an Offer in Compromise?
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People who can pay the balance in full through a payment plan before the collection statute expires. If your RCP is higher than what you owe, the IRS will generally reject the offer.
Is there an official IRS tool?
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Yes. The IRS Offer in Compromise Pre-Qualifier asks similar questions and is a good second check before filing Form 656.
What happens to my refunds if I file an offer?
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The IRS keeps any refunds due through the calendar year the offer is accepted, and they don't count toward the offer amount.
Related
TaxSettlementCalculator.com is not a tax firm, law firm, CPA, or government agency and is not affiliated with the IRS or any state tax agency. Estimates are for educational purposes only and are not tax, legal, or financial advice. Results vary based on individual circumstances, and no outcome is guaranteed. We connect users with independent tax relief professionals.