“Pennies on the Dollar?"

Let's Talk About That

May 01, 2025

A stylish male tax advisor in his early 40s with no facial hair, platinum blonde hair, blue eyes, tortoise shell glasses, and wearing a black turtleneck, dramatically separating 'Fact' from 'Fiction' in a symbolic scene. He is holding two scrolls or documents, one clearly labeled 'Fact' glowing with clarity, the other labeled 'Fiction' crumbling into dust or dissolving into smoke. The background is a sleek office or courtroom-like space filled with light and order on one side, and shadows and confusion on the other. The imagery symbolizes clarity, truth, and the advisor’s expertise in debunking tax myths.

If you’ve handled representation cases for more than a week, you’ve likely heard this from a prospective client.

“I heard I can settle my tax debt for pennies on the dollar. I want to offer less than I owe.”

The myth that the Offer in Compromise (OIC) is for everyone is still alive, thanks to aggressive marketing campaigns that promise massive debt relief with minimal effort. And unfortunately, these ads create unrealistic expectations, especially among financially distressed taxpayers who are grasping for hope. Worse still are tax professionals who perpetuate these myths to increase revenue, often at the expense of truly helping their clients.

As professionals, it's our job to shift the conversation from marketing slogans to actual strategy. Here’s how I handle OIC conversations in my practice, and why the Currently Not Collectible (CNC) status can often be a better option.

Why We Start with a Full Financial Analysis

Before I discuss numbers or share any possible outcomes, my process includes a financial analysis. That includes:

Reviewing assets, income, and expenses
Evaluation of national/local standards vs. actual expenses
Calculation of Reasonable Collection Potential (RCP)
Collection Statute Expiration Date (CSED) - The IRS typically has 10 years to collect taxes. (Certain events can toll this statute)
Projected changes in income or household size

This analysis doesn’t just help me determine if an OIC is appropriate — it protects the client from wasting time and money on an application that was never going to succeed.

It also helps us determine if CNC or a partial pay installment agreement (PPIA) is more realistic — and sometimes, strategically better.

OICs Are Not a Cure-All

Tax professionals need to remember (and remind clients) that:

The IRS rejects most OIC applications — typically, only 30–40% are accepted. In FY 2023, the IRS received 30,163 OICs and accepted only 12,711.
Submitting an OIC tolls the collection statute during the pendency of the offer, plus 30 days if the offer is rejected, and during an appeal. It is crucial to determine the CSED for all balances due.
If the offer is rejected, the taxpayer may end up worse off than if no offer had been submitted at all.

Too many practitioners jump into OICs without understanding the taxpayer’s true financial picture — or without considering whether their client can handle the process and follow-through that is required.

Why CNC Is Sometimes the Best Outcome

CNC status doesn’t get the headlines, but it often gets our clients the peace of mind they need.

If a taxpayer has no disposable income and little or no equity in assets, CNC can:

Halt enforced collections
Keep the client compliant while providing time for additional planning
Let the collection statute continue to run

I've had many clients remain in CNC for years, long enough for older debts to be time-barred for collection. In some cases, CNC is more powerful than a failed OIC because it’s faster, simpler, and doesn’t require upfront payments or application fees.

Positioning Yourself as the Strategic Advisor

A young, stylish male IRS problem solver in his mid-30s, with platinum blonde hair, blue eyes, no facial hair, wearing tortoise shell glasses and a black turtleneck, sitting at a sleek desk with a silver MacBook. He is attentively helping a concerned client solve their IRS tax problem. The client, seated across from him, is holding IRS debt notices while the advisor explains a solution using a tax resolution plan displayed on the laptop. The atmosphere is supportive, focused, and professional, with documents, a clean whiteboard with visual diagrams (no text), and a calm, well-lit modern office setting.

As tax professionals, we must move clients away from sales-driven expectations and toward evidence-based outcomes. That means:

Being transparent about OIC success rates
Educating clients on all available paths to resolve their problem
Avoid marketing based on fear. It’s my number one professional pet peeve — and, in my view, it crosses the line into unethical behavior. Educate clients with facts, not scare tactics.
Charging appropriately for the initial analysis — because that’s the real value

I often explain to clients: “You’re not paying me to submit forms — you’re paying me to resolve your issue.”

That shift in perspective builds trust and keeps expectations realistic.

Takeaways for Practitioners

Don’t lead with OICs. Lead with analysis.
Consider CNC as a viable option.
Get paid for your advice and experience, not your forms. The value is in the strategy, not the paperwork.
Avoid cookie-cutter packages. Every IRS representation case is unique and should be treated that way.
Just a reminder — Always get paid up front. Always!
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