Direct answer: If you owe the IRS and can't pay, the free IRS options are a payment plan, an offer in compromise to settle for less, penalty relief such as First Time Abate, or Currently Not Collectible status for hardship. An offer is generally rejected if a payment plan or your assets could cover the debt.
By the numbers: An offer in compromise costs a $205 application fee plus an initial payment, unless you qualify as low income. Source: IRS, Offer in compromise (Oct. 19, 2026)
““OIC mills” often overpromise results and charge high fees to taxpayers who don't qualify for an OIC.” — IRS Tax Tip 2026-40
Updated 2026-10-22
Sometimes. An offer in compromise lets you settle for less if you can't pay in full or paying would cause financial hardship. The IRS generally won't accept one if you could pay through a payment plan, the equity in your assets, or both. Check first with the free IRS Pre-Qualifier tool.
A $205 application fee plus an initial payment: 20% of the offer for a lump-sum offer, or the first monthly payment for a periodic offer. Individuals who meet the Low-Income Certification in Form 656-B (for example, $39,900 or less for one person in the 48 states for the Rev. 4-2026 booklet) pay no fee and no payments while the offer is reviewed.
An administrative waiver of failure-to-file, failure-to-pay and failure-to-deposit penalties if you had no penalties in the prior 3 years (other than an estimated tax penalty) and filed on time. You ask by calling the number on your notice or with Form 843. Starting summer 2026, for 2025 tax year returns and later, the IRS is moving to Automatic Exemption from Penalty: if you qualify, the penalty is never charged and you don't have to ask.
The IRS has decided you can't pay right now because of financial hardship and has suspended most collection. You still owe the full amount, and penalties and interest keep growing. The IRS may review your finances later, file a tax lien, and keep your refunds to pay the debt. Ask at 800-829-1040 or the number on your notice.
No. Form 656-B says an offer does not stop interest and penalties from accruing. Most collection stops while the IRS considers it, and if the IRS hasn't accepted or rejected it within 2 years (not counting appeal time), it is accepted automatically.
Generally 10 years from the date the tax was assessed, per IRS Publication 594. That clock pauses in some situations, including while the IRS considers an offer in compromise or payment plan request and during appeals.
The IRS put aggressive offer-in-compromise marketing (“OIC mills”) on its 2026 Dirty Dozen scam list. Every option on this page can be requested from the IRS yourself for free or the IRS fee. If you want help, the IRS suggests a licensed enrolled agent or reputable accountant; low-income taxpayers can use a Low Income Taxpayer Clinic for free or a small fee.
As of Oct. 22, 2026
If you owe the IRS money you can't pay, the IRS has its own relief options, and you can ask for all of them yourself. This page explains, in plain English, the four main ones: a payment plan, an offer in compromise (settling for less), penalty relief (getting penalties removed), and Currently Not Collectible status (a pause for hardship). Every fact comes from IRS.gov, with the date we read it.
Sources: IRS: OIC · IRS: FTA & AEP · IRS: CNC · IR-2026-98 · Pub. 594.
| Option | What it does | Cuts what you owe? | Penalties & interest | Cost to ask | How to ask |
|---|---|---|---|---|---|
| Payment plan | Lets you pay over time | No | Keep growing (late-payment penalty cut to 0.25% a month for on-time individual filers) | $0 short-term (180 days or less); long-term $29 online with direct debit up to $178 by phone or mail; low income waived or $43 | Online account, Form 9465, or phone |
| Offer in compromise | Settles for less than you owe | Yes, if accepted | Keep accruing while the IRS reviews; most collection paused | $205 fee + initial payment (waived for low-income individuals) | Online account or Form 656-B booklet |
| Penalty relief | Removes penalties (not the tax) | Penalties only | Interest on removed penalties comes off too | Free | Call the number on your notice, or Form 843 |
| Currently Not Collectible | Pauses most collection for hardship | No | Keep growing; refunds can be kept | Free | Call 800-829-1040 or the number on your notice; Form 433-F, 433-A or 433-B |
You can combine them: for example, ask for penalty relief and then set up a payment plan for the rest. Payment plan setup fees and late-payment rates are explained on IRS letter help. Sources: IRS: payment plans · IRS: OIC · IRS: penalty relief · IRS: CNC · IRS: failure to pay.
This follows the math in Form 433-A (OIC) (Rev. 4-2026) for one person with one home and one car. It runs in your browser; nothing is sent or saved. It is a rough screen, not the IRS's answer: the IRS uses its own allowable-expense standards and checks everything you report.
EXAMPLE Made-up numbers, not a real case: one person owes $18,000, has $2,500 in the bank and a $12,000 car with a $9,000 loan, earns $3,900 a month and has $3,750 of allowable expenses. Equity counted: $1,500 (bank $2,500 minus $1,000; the car comes to $0). Income left: $150 a month. Rough minimum offer: $3,300 lump sum ($1,500 + $150 x 12) or $5,100 periodic. Yearly income $46,800 is over the $39,900 low-income limit, so the $205 fee and a $660 initial payment (20%) would apply. Other valuables (jewelry, furniture) get an $11,980 deduction on the form and aren't in this check. Sources: Form 656-B · IRS: OIC.
An offer in compromise (OIC) is an agreement to settle your tax debt for less than the full amount. The IRS looks at your income, expenses, asset equity and ability to pay. It is meant for people who can't pay in full, or for whom paying would cause financial hardship.
Sources: IRS: OIC · Form 656-B · IRS Tax Tip 2026-40.
The most common penalties are for filing late (5% of the unpaid tax per month, up to 25%) and paying late (0.5% per month, up to 25%; 1% a month once 10 days pass after an intent-to-levy notice). For returns due after Dec. 31, 2025 that are more than 60 days late, the minimum late-filing penalty is $525 or 100% of the unpaid tax, whichever is less. There are three main ways to get them taken off:
When a penalty is reduced or removed, the IRS automatically removes the interest charged on it. Not eligible for FTA/AEP: event-based returns, the Daily Delinquency Penalty, and information returns tied to another filing.
Sources: IRS: FTA & AEP · IRS: reasonable cause · IRS: penalty relief · IRS: failure to file · IRS: failure to pay.
The IRS put aggressive or misleading offer-in-compromise marketing on its 2026 Dirty Dozen list of tax scams. These firms often overpromise and charge high fees to people who don't qualify. Be careful if a company:
If you want help, the IRS suggests a licensed enrolled agent or reputable accountant. Low Income Taxpayer Clinics are independent of the IRS and help for free or a small fee. Sources: IRS Dirty Dozen 2026 · IRS Tax Tip 2026-40 · LITCs.
Related: Tax hub · Wage garnishment · Debt relief options · How to file free.
Facts, not tax or legal advice. We summarize what the IRS and the Taxpayer Advocate Service publish, with dates. The rough check is arithmetic on numbers you type, not an IRS decision. We don't file anything for you and we don't refer you to any company.
Sometimes. An offer in compromise lets you settle for less if you can't pay in full or paying would cause financial hardship. The IRS generally won't accept one if you could pay through a payment plan, the equity in your assets, or both. Check first with the free IRS Pre-Qualifier tool.
A $205 application fee plus an initial payment: 20% of the offer for a lump-sum offer, or the first monthly payment for a periodic offer. Individuals who meet the Low-Income Certification in Form 656-B (for example, $39,900 or less for one person in the 48 states for the Rev. 4-2026 booklet) pay no fee and no payments while the offer is reviewed.
An administrative waiver of failure-to-file, failure-to-pay and failure-to-deposit penalties if you had no penalties in the prior 3 years (other than an estimated tax penalty) and filed on time. You ask by calling the number on your notice or with Form 843. Starting summer 2026, for 2025 tax year returns and later, the IRS is moving to Automatic Exemption from Penalty: if you qualify, the penalty is never charged and you don't have to ask.
The IRS has decided you can't pay right now because of financial hardship and has suspended most collection. You still owe the full amount, and penalties and interest keep growing. The IRS may review your finances later, file a tax lien, and keep your refunds to pay the debt. Ask at 800-829-1040 or the number on your notice.
No. Form 656-B says an offer does not stop interest and penalties from accruing. Most collection stops while the IRS considers it, and if the IRS hasn't accepted or rejected it within 2 years (not counting appeal time), it is accepted automatically.
Generally 10 years from the date the tax was assessed, per IRS Publication 594. That clock pauses in some situations, including while the IRS considers an offer in compromise or payment plan request and during appeals.
The IRS put aggressive offer-in-compromise marketing (“OIC mills”) on its 2026 Dirty Dozen scam list. Every option on this page can be requested from the IRS yourself for free or the IRS fee. If you want help, the IRS suggests a licensed enrolled agent or reputable accountant; low-income taxpayers can use a Low Income Taxpayer Clinic for free or a small fee.
Not tax advice. Figures are republished from the IRS with dates; confirm with IRS.gov or a tax professional before acting.