Two Pints and a Goldie retweetledi
You owe the IRS $100,000
They'll take $5,000 and close your file. Permanently. Balance goes to $0
It's called an Offer in Compromise. Form 656. The IRS approved 42% of them last year. Application fee: $205
Here's the exact formula they use to decide your number and how to make sure yours gets accepted
The IRS doesn't want to chase you for 10 years. Collection costs money. Agents cost money. Liens cost money. They'd rather take $5,000 today than spend $50,000 over a decade trying to squeeze $100,000 out of someone who will never have it
That's the entire program. They did the math and built a form for it
The formula:
The IRS calculates your "Reasonable Collection Potential." What they realistically think they can get from you. Your offer needs to meet or beat that number
RCP = (monthly disposable income × remaining collection months) + (asset equity after exemptions)
Monthly disposable income: your gross income minus IRS-allowed expenses. They have specific tables for housing, food, transportation, and healthcare by county. Not YOUR expenses. THEIR approved numbers
If you earn $4,000/month and their table says your allowable expenses are $3,800, your disposable income is $200/month
Remaining months: for a lump sum offer (paid within 5 months), they multiply by 12. For a payment plan (6-24 months), they multiply by 24
Assets: bank accounts, investments, vehicles, property. But they subtract exemptions. Your primary car up to a certain value is exempt. Household furnishings exempt. Retirement accounts often partially exempt
Real case:
Disposable income: $200/month
Asset equity after exemptions: $2,000
Lump sum RCP: ($200 × 12) + $2,000 = $4,400
That's your offer. $4,400 on $100,000 in tax debt. 4.4 cents on the dollar
The forms:
Form 433-A (OIC): full financial disclosure. Income, expenses, assets, bank statements. Every number. Fill it out honestly because they verify everything. Lying on this form is a federal crime and they'll reject your offer AND flag you for audit
Form 656: the offer itself. Your amount. Your payment terms
$205 application fee (waived if income is below 250% of federal poverty level)
Initial payment: 20% of your offer submitted with the application for lump sum. On a $4,400 offer that's $880 upfront
Here's the part that makes this genuinely broken:
While your offer is being reviewed, which takes 6-24 months, ALL collection activity stops. No levies. No liens. No wage garnishment. They legally cannot collect while the OIC is pending
And if the IRS doesn't make a determination within 2 years of receiving your application? Your offer is automatically accepted. Two years of silence = you win by default. That's in the tax code lmao
Client owed $147,000 across 3 tax years. Hadn't filed. Hadn't paid. Getting letters every month. We calculated his RCP at $6,200. Submitted the OIC with $1,240 initial payment
IRS accepted 7 months later
$145,000 in tax debt settled for $6,200. 4.2 cents on the dollar
He went from not opening his mailbox to a $0 IRS balance. Then we fixed his credit. Then we stacked $80K in 0% business funding. Started a pressure washing company 5 months later
The IRS is the scariest creditor in America. They can garnish without a court order. Seize your bank account with no warning. Lien everything you own
But they also built a program where they take your $5,000 and walk away happy
The difference between the person who pays $100,000 and the person who pays $5,000 is knowing Form 656 exists
Now you know
(We fix credit and build capital stacks. If you owe back taxes, handle that first. Then we get you funded. Link in bio)
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