IRS letter help
Settling with the IRS for less than you owe
You owe the IRS more than you can pay, and you want to settle for less.
The lowest offer the IRS will take is your leftover monthly income times 12 or 24, plus your equity. Applying costs $205.
Call now and talk through which IRS option fits your numbers before you pay anyone.
Which numbers matter?
$205
The fee stays with the IRS even if your offer is turned down.
Check the low-income guidelines before you apply, since meeting them lets you skip the fee.
12 or 24
Your leftover monthly income times 12 or 24, plus your equity, sets your lowest offer.
Figure that total before you pick a dollar amount for your offer.
30 days
A rejected offer gives you 30 days to appeal on Form 13711.
Mark the date on your rejection letter and file the appeal before day 30.
Check your offer numbers first
You pay $205 plus 20% of a lump sum offer when you mail Form 656, and neither comes back if the IRS rejects it.
A licensed tax professional runs your 12 or 24 month math and checks whether a payment plan costs you less.
Call now and test your offer amount against a payment plan before you mail Form 656.
Call 855-964-5291What happens when you call
- You call during business hours and say which letter or bill you have.
- A licensed tax professional asks what you owe, what is left of your monthly income and what you own.
- You hear your options for this notice and decide what to do. Nothing is filed without your yes.
A licensed tax professional answers, not the IRS. The call costs nothing, and you give up nothing by calling. IRS Code Lookup is a private tax help service.
Would you rather send your notice details?
Send what you owe and the date on your letter, and a licensed tax professional runs the Form 433-A (OIC) math with you.
The $205 fee is not refunded, so a second look before you mail Form 656 helps.
Who qualifies?
You can apply if you:
- Filed every required return and made every required estimated payment.
- Are not in an open bankruptcy case.
- Made tax deposits for the current quarter and past 2 quarters, if you are an employer.
Being able to apply is not the same as being accepted. The IRS weighs your ability to pay, income, expenses and asset equity, per its offer in compromise page.
How does the IRS figure the number?
Form 656-B, the offer booklet, uses one formula. Take what is left of your monthly income after allowed living costs. Multiply it by 12 if you will pay the offer within 5 months, or by 24 if you will pay over 6 to 24 months. Add the equity in what you own. That total is the lowest offer the IRS will take.
Ignacio owes $38,000. After allowed costs he has $150 a month left, and $2,000 of equity in his car. A lump sum offer comes to $150 × 12 + $2,000 = $3,800.
What is my lowest offer?
ExampleLowest offer by the IRS worksheet: $3,800
Example: $150 a month × 12 + $2,000 = $3,800, less than the $38,000 owed. Enter your own numbers.
This is the Form 656-B worksheet math, not an IRS decision.
Have these numbers reviewed before you pay a $205 fee: call 855-964-5291.
For the official version, use the IRS pre-qualifier tool. It asks the same kind of questions.
What do I mail with the offer?
- Form 656 for the offer. Use one for personal tax debt and a separate one for business tax debt.
- Form 433-A (OIC) if you are an individual, or 433-B (OIC) for a business. Attach the papers it lists.
- The $205 application fee.
- The first payment: 20% of the offer for a lump sum, or the first monthly payment for a periodic offer.
If your income is low enough to meet the low-income guidelines, you skip the fee and the payments while the IRS reviews. You can also file online through your individual online account. All of this is on the IRS offer page.
How long until the IRS decides?
The IRS says an offer is automatically accepted if it makes no determination within two years of receipt, excluding time in an appeal. While it reviews, most other collection pauses, but the IRS can still file a lien.
If it is rejected, you have 30 days to appeal on Form 13711. The IRS itself says the program is not for everyone, and it tells you to check the credentials of anyone you pay to file one.
What should you read next?
Questions people ask
How much does an offer in compromise cost?
The application fee is $205 and is not refunded. A lump sum offer also needs 20% of the offer up front.
What is Form 656?
It is the offer form itself. You file it with Form 433-A (OIC) or 433-B (OIC) and the fee.
How does the IRS decide an offer amount?
Monthly income left after allowed costs, times 12 or 24, plus the equity in what you own.
How long does an offer in compromise take?
The IRS describes a two-year period before an offer is automatically accepted without a decision. An appeal period does not count toward that time.
Can I appeal a rejected offer?
Yes, within 30 days, using Form 13711.
Sources
- Offer in compromise. Published by irs.gov.
- Form 656-B, Offer in Compromise Booklet. Published by irs.gov.
- Offer in Compromise Pre-Qualifier. Published by irs.treasury.gov.
Last checked October 2026
What to do now
- File every missing tax return before you apply for an offer.
- Run the IRS pre-qualifier tool to see if you can apply.
- Multiply your leftover monthly income by 12 or 24, then add your equity.
- Have a licensed tax professional check the math before you mail anything.
- Submit Form 656 and the financial form for your situation, with the $205 fee and first payment unless you meet the low-income guidelines.
Call now and test your offer amount against a payment plan before you mail Form 656.
A licensed tax professional answers, not the IRS. The call costs nothing, and you give up nothing by calling. IRS Code Lookup is a private tax help service.