Why Should the IRS Accept an Offer to Pay Pennies on the Dollar?

Services for Real Estate Pros with Backoffice Squared

I represent taxpayers in Gainesville and the state of Florida who have tax issues with the IRS.

You see the ads on TV about the IRS accepting “pennies on the dollar” to clear their backlog of tax debts. Seems like an easy answer to a big problem. But, as they say, “too good to be true, is usually not true.”

The reality is that while the IRS does accept these offers, 60% of them are rejected according to the IRS Data Book that is issued annually. This makes a ton of sense when you think about it. Afterall, why should a government agency with more collection powers than anyone in private industry be so willing to just forgive debt? You can bet that IRS employees don’t receive any special rewards at the end of year for the most money given away.

The IRS does accept 40% of the Offers-in-Compromise. These are offers that they felt was in the Government’s best interest to accept. Meaning, that they ran the numbers and decided this was the max they could expect to collect from the taxpayer.

So, how do you tilt the pinball machine to make it more likely to be in the 40% accepted. It starts with running your numbers on potential future earnings with the same formula that the IRS uses. This is called the “Reasonable Collection Potential” formula which calculates your disposable income on a monthly basis. Whatever this amount is times the number of months left before the Statute of Limitations nulls the debt is where the IRS is going to start. To make it into the acceptance column, you must make it a better deal than just sticking with the status quo.

If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please feel free to contact me at either (352) 317-5692 or email jim@backoffice2.net.


Jim Payne, CPA


Gainesville, FL

Cell (352) 317-5692

Office (352) 376-9401

Fax (352) 376-9440




This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Local News and Events
reasonable collection potential

Spam prevention
Show All Comments
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH

Thanks for keeping us in the know when it comes to IRS matters.  Its so helpful to have someone in our group

Apr 02, 2020 04:27 AM #1
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?