“Pennies on the Dollar” Tax Debt Promises Should Set Off This Red Flag

A legitimate IRS Offer in Compromise can reduce qualifying tax debt, but eligibility depends on a taxpayer’s financial circumstances. Promises of “pennies on the dollar” relief made before reviewing those circumstances deserve extra scrutiny – Shutterstock

A tax-relief company promising to settle a large IRS bill for “pennies on the dollar” may sound like exactly the break a struggling taxpayer needs. But that phrase should make the sales pitch pause, especially if the company makes the promise before reviewing the taxpayer’s income, expenses, assets, and actual tax situation.

The warning matters because legitimate tax relief exists, but it does not work like a coupon code for your IRS balance. The IRS offers an Offer in Compromise, or OIC, that can settle qualifying tax debt for less than the full amount owed. Eligibility depends on individual circumstances, and the IRS decides whether to accept the offer.