Federal data shows that the Internal Revenue Service has accepted far fewer deals from taxpayers trying to resolve tax debts. The Service accepted about 5,500 Offers in Compromise (OIC) during fiscal year 2025.
That’s a 57% decline from 2023, when the agency accepted about 12,700 offers, according to agency data. Meanwhile, the number of compromise offers submitted to the IRS by taxpayers increased 29% over that time period, to about 38,800 in fiscal year 2025.
In other words, more people are applying for offers, but far fewer are successful.
“I’ve never seen a number that low,” said Nina Olson, who served as the National Taxpayer Advocate at the IRS from 2001 to 2019.
The trend, likely attributable at least in part to deep cuts to the IRS workforce, could also lead to lower tax revenues collected by the federal government, depending on how aggressively it tries to recover debts through other collection measures.
The financial amount of offers in compromise has steadily declined alongside the total number of accepted offers. OICs accepted by the IRS in fiscal year 2025 were worth $98.1M, less than half the $214.5 million in 2023, data shows.
Let me leave you with this…
I’m sure you’ve all seen the ads on late-night, insomniac theater that go like this…
“I owed the IRS $50K, but the law firm of Dewey, Cheatum, and Howe got that number reduced to five cents on the dollar.”
I’m sure you’ve also seen ads for other tax resolution firms that tout “New and Special Federal Programs” that can reduce your tax debts. But the deal won’t last forever, so you need to call now.
Let’s separate fact from fiction.
There are no “New and Special Programs” to reduce any federal debt. The only one that has ever existed is the OIC.
In this process you owe a federal tax debt. You then offer less than the full amount, and the government hopefully agrees to accept something in the middle. Hence the term…
Offer In Compromise. It’s the only aptly named federal program in existence.
OIC’s used to be a process of backroom deals where the Service intentionally put up every possible roadblock to avoid making a deal. It used to go like this…
1 – You fill out the paperwork beginning the process. The IRS would then reject the paperwork on a technicality. Typically, they’d begin the process only after the third submission.
2 – The Revenue Officer assigned to the case would ask for this bank statement, that loan document, or whatever else you could imagine. You’d then have thirty days to comply. If you didn’t comply within those thirty days, they had the right to stop working the case.
3 – If you met all of those deadlines, within the first year of the case, they’d reassign it to a new Revenue Officer, and you’d start the process again from square one.
4 – By the time you got to the third Revenue Officer, you could request a manager, and then a deal would get done.
The entire program was designed to impede and ultimately halt the process because the IRS is forever and unwilling to make any deals. Whether they collect a tax debt from you or your estate once you’ve taken the eternal dirt nap is irrelevant to them.
They know that sooner or later they’re probably going to collect. Why make a deal?
The OIC Program is now one solely based on the numbers.
You fill out the paperwork and must submit a check for 20% of your offer for the IRS to work the case.
The IRS cashes your check and won’t return the money, whether your offer is accepted or not.
The Service then reviews the numbers to decide whether or not you can afford to pay your tax bill in a “reasonable” amount of time. Examples would be…
1 – You owe $200K in tax, have absolutely no income whatsoever, but have $500K in equity in your home. Technically you can repay your bill.
2 – You owe $200K. Your annual income is $100K, and after paying all of your bills every year, you incur an additional $10K in debt. But one of those bills is for a high end sportscar. Since you’re only allowed the average car allowance for people living in your county, the IRS deems there is no reason to give you a deal because under normal circumstances you could repay your bill.
Get the picture? And now they’re handing out even fewer deals than they normally would.
I can’t tell you how many calls I get every year asking me to help reduce a tax bill.
If you don’t own anything but an old pair of blue jeans, are living in your Mama’s basement, and have no income, then it’s easy to get a tax bill down to 5 cents on the dollar. I’ve done dozens of deals like this in the past.
But if you aren’t completely dead broke and destitute, there’s probably no reason to even begin the process. And any tax resolution service that promises the world for the low, low discount price of only $300 per month, probably won’t deliver anything other than a reduction to your checking account in the first place.
Think about it.
As always, if you’re having problems with your accounting and tax work, what are you waiting for? Please call us today.
We’re all going to get through this. Let’s get through it together…
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, Accounting and Tax Work, Tax Planning, or Tax Representation, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
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