What is an IRS Offer in Compromise?

An IRS Offer in Compromise is a request asking the IRS to accept less than the full tax balance owed. It may be available when the taxpayer cannot pay the full balance or when full payment would create financial hardship. The IRS reviews the taxpayer’s financial situation before deciding.

Who qualifies for an IRS Offer in Compromise?

A taxpayer may qualify if they are in filing and payment compliance and their income, expenses, assets, and future ability to pay show that the IRS is unlikely to collect the full balance. The IRS makes the final decision based on the taxpayer’s facts and documents.

Does everyone with IRS tax debt qualify for an Offer in Compromise?

No. If the IRS believes you can fully pay the balance through a payment plan, asset equity, or future income, an Offer in Compromise may not be accepted. Other options, such as a payment plan or Currently Not Collectible status, may be more appropriate.

How does the IRS calculate an Offer in Compromise?

The IRS generally reviews reasonable collection potential. This can include asset equity, future income, and allowable living expenses. A strong review should include bank accounts, home equity, vehicle equity, retirement accounts, business assets, income, and monthly expenses.

Can I apply for an Offer in Compromise if I have unfiled tax returns?

Usually, all required tax returns must be filed before the IRS will process an Offer in Compromise. If you have unfiled returns, the first step is usually to get compliant before deciding which IRS resolution option may apply.

What happens while an Offer in Compromise is pending?

While the IRS evaluates an Offer in Compromise, certain collection activity may be suspended, but the IRS may still file a Notice of Federal Tax Lien. You also need to respond to IRS requests and stay compliant with current tax obligations.

What if my Offer in Compromise is rejected?

If the IRS rejects an Offer in Compromise, you may have appeal rights. The best next step depends on why the offer was rejected, whether the IRS disagreed with income, expenses, assets, or eligibility, and whether another resolution option may be better.

Does an IRS Offer in Compromise also resolve California FTB tax debt?

No. An IRS Offer in Compromise only addresses federal IRS tax debt. If you also owe California FTB tax debt, that issue must be reviewed separately under California’s rules and procedures.

IRS Tax Lien Help

An IRS tax lien is the government’s legal claim against property when a taxpayer owes federal tax debt and the balance remains unpaid after demand for payment. A filed Notice of Federal Tax Lien can affect property, financing, and business matters.

EA Tax Resolutions helps taxpayers review lien notices, balances, transcripts, and options such as payment plan, lien withdrawal, discharge, subordination, CNC status, or Offer in Compromise.

Schedule a Free Discovery Call

Can an IRS tax lien be removed or withdrawn?

Sometimes. A federal tax lien may be released when the tax debt is paid or becomes legally unenforceable, and withdrawal, discharge, or subordination may be available in specific situations.

The correct option depends on the property involved, tax years, balance, collection status, and IRS rules.

What is a federal tax lien?

A federal tax lien is a legal claim against a taxpayer’s property. When the IRS files a Notice of Federal Tax Lien, the lien becomes public and may affect real estate, business assets, credit, refinancing, or sale transactions.

A lien is different from a levy. A lien is a claim; a levy is the actual seizure of property or money.

Who This Applies To

The IRS filed a Notice of Federal Tax Lien.
You are selling, refinancing, or buying property affected by a lien.
A lender, escrow, title company, or buyer raised an IRS lien issue.
You want to know whether withdrawal, discharge, or subordination may apply.
You need a plan to resolve the tax debt behind the lien.

Relief / Options That May Be Available

Lien release

The IRS releases a lien when the debt is paid or otherwise becomes unenforceable.

Lien withdrawal

Withdrawal removes the public Notice of Federal Tax Lien in certain situations, but it does not necessarily erase the tax debt.

Discharge of property

A discharge may remove the lien from specific property, often in connection with a sale or transfer.

Subordination

Subordination may allow another creditor to move ahead of the IRS lien, which may help with refinancing or loans.

Underlying debt resolution

Payment plan, OIC, CNC status, or other resolution may address the debt behind the lien.

Who May Qualify or When This Service May Apply

The lien has been paid or the debt is legally unenforceable.
A withdrawal request fits IRS criteria.
A property sale or refinance supports discharge or subordination.
An installment agreement or other resolution supports lien relief.

Documents Needed

Notice of Federal Tax Lien
IRS balance notices and transcripts
Property address and title/escrow documents
Purchase agreement, refinance documents, or loan documents
Payoff statements
Appraisal or valuation records
Mortgage and lienholder information
Tax returns and financial documents if resolution is needed

How EA Tax Resolutions Helps

EA Tax Resolutions reviews your IRS or state tax account, identifies the issue, determines which options may apply, and helps prepare a response or resolution strategy based on the facts.

Our process may include:

Reviewing IRS or FTB notices and deadlines.
Reviewing transcripts, account history, balances, and tax years involved.
Checking filing compliance and current payment compliance where relevant.
Identifying the issue and whether the government balance or proposed change should be reviewed further.
Determining which relief, response, appeal, or collection resolution options may apply.
Gathering and organizing supporting documents.
Preparing the response, request, or resolution package based on the facts.
Communicating with the IRS or FTB when appropriate under a valid authorization.
Reviewing the government response and next steps.

EA Tax Resolutions is led by Anthony Fontana, CPA, a former California Franchise Tax Board auditor. We help taxpayers resolve IRS and California tax problems with a direct, practical, and fact-based approach. Our goal is to review the taxpayer’s actual account, explain the available options, and help determine the next step based on the facts.

Get Help Reviewing Your IRS Tax Problem

If you received an IRS or California tax notice, do not assume the balance, proposed change, or collection action is final. EA Tax Resolutions can help review the issue, explain your options, and determine the next step.

Local California / FTB Context

California taxpayers may have both IRS federal tax liens and California FTB liens. Each lien must be reviewed separately.

Who May Not Qualify or When Another Option May Be Better

The taxpayer still owes the debt and no lien relief criteria are met.
The taxpayer confuses lien release with withdrawal.
The request lacks escrow, title, loan, or property documents.
Missing returns or unresolved collection issues remain.

Common Mistakes

Assuming a payment plan automatically removes a filed lien.
Waiting until escrow is about to close.
Requesting withdrawal when discharge or subordination is actually needed.
Ignoring the tax debt behind the lien.
Failing to review all years and balances.
Not providing title or property documents.

Related Tax Resolution Services

IRS Penalty Abatement Help

California FTB Tax Debt Help

Schedule a Free Discovery Call

An IRS bank levy is the legal seizure of funds from a bank or financial account to collect tax debt.
Banks generally hold funds for 21 days before sending them to the IRS, but timing should be verified immediately.
Yes, a levy may be released when required or when facts such as hardship or a resolution option support release.
Possibly, but it depends on timing, whether funds were remitted, and whether the IRS agrees there is a basis for release or return.
An approved and maintained payment plan may help prevent future levies, but the taxpayer must stay compliant.
No. A levy seizes money or property. A lien is a legal claim against property.
Yes. California FTB collection is separate from IRS collection and may require separate action.
EA Tax Resolutions can review notices, transcripts, bank documents, and hardship facts and help determine the next step.

FAQ’s

Helpful Official Resources

IRS - Revocation or Denial of Passport

IRS - Understanding Your CP508C Notice

IRS - Understanding Your CP508R Notice

IRS - Publication 594

IRS - Publication 1660

IRS - Payment Plans

IRS - Offer in Compromise

Get Help With IRS Bank Levy

If this tax problem has created stress, deadlines, collection risk, or a larger tax balance, do not assume the IRS or FTB position is final. EA Tax Resolutions can help review the notice, account history, and available options.

Schedule a Free Discovery Call

What the Taxpayer Should Do Next

Do not ignore the notice, balance, deadline, or collection action.
Gather the IRS or FTB notices, tax returns, and supporting documents.
Review transcripts or account history when available.
Identify whether the issue is tax, penalties, interest, collection, filing compliance, or a proposed adjustment.
Determine whether a response, appeal, payment plan, CNC status, OIC, levy release, or other option may apply.
Avoid signing an agreement or making admissions before the facts are reviewed.