IRS Offer in Compromise Attorney in South Carolina

An offer in compromise is an agreement with the IRS to settle a tax debt for less than the full amount owed. The IRS accepts an offer only when the numbers support it, usually when it agrees it cannot reasonably collect the full balance within the time the law allows. South Carolina Tax Law Firm PA helps individuals and businesses across South Carolina decide whether an offer makes sense, prepare the offer and financial statements, negotiate with the IRS, and appeal if a reasonable offer is rejected.

Call (803) 753-7376 or request a consultation. It helps to have your recent IRS notices and a general idea of your monthly income, expenses, and assets.

Is an offer in compromise right for you?

An offer is one of several ways to resolve an IRS balance, and for many people it is not the best one. The IRS compares your offer with what it calls your reasonable collection potential: the equity in your assets plus a set amount of your future disposable income. If that figure is more than you owe, the IRS will generally expect full payment through an installment agreement instead. If it is less, an offer may be worth pursuing.

An offer is more likely to fit when:

• Your income after allowable living expenses is low compared with the balance
• You have little equity in a home, vehicles, retirement accounts, or other assets
• Your situation is unlikely to improve, for example because of age, health, or a long-term change in income
• Much of the collection period is still left, so an installment agreement would not end the debt

The IRS has an online Offer in Compromise Pre-Qualifier that gives a rough idea of eligibility. A careful review of your finances against the IRS’s own standards gives a much more reliable answer.

The three types of offers

• Doubt as to collectibility. The most common type. You agree you owe the tax, but your assets and income are not enough to pay it in full before the collection period ends.
• Doubt as to liability. You dispute that you owe the tax, for example because the IRS assessed it in error and you did not have a full chance to contest it. This type uses Form 656-L and does not require financial statements.
• Effective tax administration. You could pay in full, but doing so would cause economic hardship, or there are compelling public policy or fairness reasons, such as serious illness or a long-term disability.

How the IRS calculates an acceptable offer

For a doubt as to collectibility offer, the minimum the IRS will generally accept is your reasonable collection potential, which has two parts:

• Net equity in assets. Usually the quick-sale value of what you own, often 80 percent of fair market value, minus loans secured by the asset. Some assets, such as certain tools of a trade and household items, are partly excluded.
• Future disposable income. Your monthly income minus allowable expenses, multiplied by 12 if you pay the offer within 5 months (a lump sum offer), or by 24 if you pay over 6 to 24 months (a periodic payment offer).

Allowable expenses are not simply what you spend. The IRS uses national and local standards for food, clothing, housing, utilities, transportation, and health care, and it allows other expenses, such as current taxes, child care, and court-ordered payments, when they are necessary. How income, expenses, and asset values are documented often makes the biggest difference in the outcome.

What you need to qualify

• All required federal tax returns filed
• Current-year estimated tax payments made, and for employers, current payroll tax deposits made
• Not in an open bankruptcy case
• Form 656 and the collection information statement (Form 433-A (OIC) for individuals, Form 433-B (OIC) for businesses), with supporting documents
• The application fee (currently $205) and the required initial payment: 20 percent of the offer amount for a lump sum offer, or the first monthly payment for a periodic payment offer

Individuals who meet the IRS’s low-income guidelines do not pay the application fee or the initial payment. The current forms and instructions are in IRS Form 656-B, Offer in Compromise Booklet.

How we handle an offer in compromise, step by step

1. Review the account. We file a power of attorney (Form 2848), pull your IRS transcripts, and confirm the balance, unfiled years, and collection statute expiration dates.
2. Run the numbers. We calculate your reasonable collection potential using the IRS standards and tell you plainly whether an offer, an installment agreement, currently not collectible status, or another option fits better.
3. Get compliant. We help file any missing returns and set up current estimated payments or deposits.
4. Prepare and file the offer. We prepare Form 656, the financial statements, and a cover letter that explains the numbers and any special circumstances, with the documents the IRS will ask for.
5. Work with the offer examiner. We respond to requests for information, address questions about asset values and expenses, and negotiate the offer amount.
6. Appeal if needed. If the IRS rejects the offer, we can appeal to the IRS Independent Office of Appeals within 30 days of the rejection letter (Form 13711).
7. Stay compliant after acceptance. We explain the terms you must meet, including filing and paying on time for five years, so the accepted offer stays in place.

What happens while your offer is pending

• Levies generally stop. The IRS generally cannot levy while a processable offer is pending, for 30 days after a rejection, and while a timely appeal is pending.
• The collection period is extended. The 10-year collection period is suspended during the same time, which matters if your offer is not accepted.
• Liens stay in place. The IRS may still file a notice of federal tax lien, and an existing lien is released only after the offer terms are met.
• Payments and refunds go to the IRS. Payments made with the offer are generally not refunded, and the IRS keeps tax refunds through the year the offer is accepted.
• Timing. Offers commonly take many months to evaluate. If the IRS does not make a decision within 24 months, the offer is treated as accepted by law (IRC 7122(f)).

Offers in compromise and your South Carolina taxes

An IRS offer in compromise settles only federal tax. It does not reduce what you owe the South Carolina Department of Revenue, which has its own collection rules and options. If you owe both, we look at the federal and state balances together so that a payment plan or settlement on one side does not leave you unable to meet the other. State assessments can also be challenged through the SCDOR appeal process.

Attorney experience

The firm is led by attorney Daniel P. Knudsen, who has represented taxpayers in tax controversies for more than 10 years, including litigation before the U.S. Tax Court. Before entering private practice, Daniel represented taxpayers before the IRS at a Low Income Taxpayer Clinic funded through the IRS Taxpayer Advocate Service grant program, and worked in the Executive Division of a state department of revenue.

Daniel holds an LL.M. in Taxation and certificates in International Taxation and State and Local Taxation from Georgetown University Law Center, and completed the Tax Litigation Training Program, a professional certificate program, at Villanova University Charles Widger School of Law. Every offer is prepared and negotiated by an attorney.

Offer in compromise help throughout South Carolina

Our office is in Spartanburg, and we help clients with offers in compromise throughout South Carolina, including Greenville, Columbia, Charleston, North Charleston, Mount Pleasant, and Rock Hill. Offers are filed and negotiated by mail, phone, and fax, so you do not need to live near Spartanburg.

Offer in compromise questions

How much will the IRS accept?

It depends entirely on your finances. The IRS generally expects an offer of at least your reasonable collection potential, based on your asset equity and future disposable income under its standards. There is no set percentage, and any advertisement that promises a specific result should be treated with caution.

How long does an offer in compromise take?

Commonly six months to a year or more, depending on the complexity of your finances and IRS workloads. An appeal adds more time.

What happens if my offer is rejected?

You can appeal to the IRS Independent Office of Appeals within 30 days of the rejection letter. If the offer was returned rather than rejected, for example because a return was missing, there is generally no appeal, but a new offer can be filed once the problem is fixed.

Can a business file an offer in compromise?

Yes. Businesses use Form 433-B (OIC). An operating business that owes payroll taxes generally must be current on its deposits, and the owners or officers may also face a separate trust fund recovery penalty that needs its own resolution.

What if I can’t pay anything right now?

If your income only covers basic living expenses, currently not collectible status may fit better than an offer. The IRS pauses active collection, although interest continues and the IRS reviews your finances again later.

Related tax controversy services

• IRS collections, levies, and liens
• IRS appeals, including offer rejections
• IRS penalty abatement
• IRS installment agreements
• U.S. Tax Court litigation
• SCDOR appeals and the SC Administrative Law Court

Talk to a South Carolina offer in compromise attorney

If you owe the IRS more than you can pay, call (803) 753-7376 or request a consultation. We will review your situation and tell you which option fits. Please don’t include confidential details in the contact form. Submitting it does not create an attorney-client relationship.

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South Carolina Tax Law Firm PA is a private law firm and is not affiliated with the IRS, the South Carolina Department of Revenue, or any government agency. Attorney responsible for this content: Daniel P. Knudsen, 405 S. Pine St., Suite F, Spartanburg, SC 29302. This page provides general information, not legal advice. Every case depends on its own facts, and no particular outcome can be promised.

Reviewed by Daniel P. Knudsen, attorney, October 2026.