If you owe federal tax and want to settle for less than the full amount, check your potential eligibility with the IRS Offer in Compromise Pre-Qualifier or your Individual Online Account. An Offer in Compromise (OIC) is a way to resolve tax debt you owe—not a general IRS compensation payment. The online result is preliminary; the IRS decides after reviewing your application and circumstances.
If you are asking about money from a lawsuit settlement, that is a separate issue. The IRS guidance here does not establish a general compensation program or claim you can apply for.
Check whether an Offer in Compromise fits your situation
An OIC lets an eligible taxpayer settle their own tax debt for less than the full amount owed. The IRS considers the taxpayer’s facts and circumstances, including income, expenses, asset equity, and ability to pay. That does not mean every person who cannot pay immediately will qualify.
The IRS also lists payment in full, payment plans, and temporary collection delay among tax-debt resolution options. Which route fits depends on what you owe, whether you can pay in full, your available cash flow and timeframe, your financial circumstances, and whether your required returns are filed.
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Use the IRS tools for a preliminary eligibility check
- File any missing required returns. The IRS says filing missing returns is the first step toward resolving tax debt and can make more resolution options available. See Get help with tax debt.
- Open the IRS Offer in Compromise Pre-Qualifier. The tool asks for filing and financial information and provides preliminary guidance. The IRS says it “should only be used as a guide”; it is not an approval. Start at the Offer in Compromise page.
- Alternatively, check through your Individual Online Account. The IRS identifies the account as another way for individuals to check potential eligibility. Use the official IRS Individual Online Account page.
- Review current application instructions before filing. Tool results do not replace the application or the IRS review. Requirements can change, so check the current forms and instructions on the IRS OIC page before submitting.
Know what the online result does—and does not—tell you
A favorable preliminary result does not guarantee acceptance. The IRS makes its decision based on the completed application and its review of your circumstances. Do not treat the screening tool as a final eligibility determination or assume that a particular amount will be accepted.
The IRS Tax Tip dated May 14, 2026 stated that an application required a $205 fee and an initial payment, with both waived for qualifying low-income taxpayers. Because these are dated requirements, confirm the current amount, payment rules, and exceptions in the IRS instructions when you apply.
If you mean compensation from a lawsuit settlement
An OIC is not a way to claim money from the IRS. For a lawsuit payment, tax treatment depends on what the payment was intended to replace and the facts of the settlement. IRS guidance says compensatory damages for personal physical injury or sickness are generally excluded from income, while many other categories—including punitive damages and lost wages in most cases—are generally taxable. Your settlement agreement, claim, and payment allocation matter. Review IRS Publication 525 and the IRS guidance on tax implications of settlements and judgments; consult a qualified tax professional about your specific payment if needed.
Avoid tax-debt settlement scams
The IRS warns about services that pressure taxpayers and promise to reduce tax debt for “pennies-on-the-dollar.” If you may qualify, you can apply directly with the IRS. A paid service cannot guarantee acceptance. Before sharing sensitive information or paying for help, verify a tax professional’s credentials and use IRS.gov or the contact details on an IRS notice. See the IRS page on recognizing tax scams and fraud.
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Get help from the IRS through verified channels
If a notice or account detail is unclear, use the phone number printed on your IRS notice, the official IRS contact page, or an IRS Taxpayer Assistance Center. Your Individual Online Account can also show account balance and transcript information. Avoid relying on contact details supplied by an unsolicited caller, email, or text.
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