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Offer in Compromise —
Pima County, Arizona

Name: TaxCase Review — Pima County OIC
Telephone: +18883345052
Price range: $399

An Offer in Compromise (OIC) lets you settle your IRS tax debt for less than you owe. For many Pima County taxpayers, qualifying for an OIC could mean resolving your balance for a fraction of what you owe. But the IRS accepts only approximately 14.1% of applications (IRS Data Book 2025, Table 4-1) — understanding the formula and the process is critical. See our flat-fee pricing →

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Quick Answer

An Offer in Compromise in Pima County lets you settle IRS debt for less than you owe, based on the Reasonable Collection Potential (RCP) formula. You qualify if you can't pay the full amount within the collection statute (typically 10 years) and have filed all required returns. The IRS weighs your monthly income, allowable living expenses, and asset equity. A $399 case review tells you whether OIC is your best option in Tucson or whether another resolution path makes more sense.

What is an Offer in Compromise?

An Offer in Compromise is an IRS program that allows taxpayers to settle their tax debt for less than the full amount owed. The IRS accepts an OIC when the offered amount represents the most they can reasonably expect to collect within the time they have left to collect. This isn't a loophole — it's a legitimate program designed for taxpayers who genuinely cannot pay their full liability.

For Pima County taxpayers carrying the average debt of about $26,800, an accepted OIC could mean settling for $4,000-$9,000 or less, depending on your financial picture. The IRS applies strict eligibility rules and a specific formula to decide what it will accept, so the numbers matter as much as the paperwork. Tucson households whose income comes from University of Arizona grant work, seasonal tourism, or 1099 contracting often see month-to-month swings that affect the calculation.

The Reasonable Collection Potential (RCP) Formula

The IRS uses the RCP formula to set the minimum amount it will accept for an Offer in Compromise. Understanding this formula tells you whether OIC is realistic for your Pima County situation before you spend time and money on an application.

RCP Formula

RCP = (Monthly Disposable Income × Factor) + Net Equity in Assets

Monthly Disposable Income: Your gross income minus IRS-allowable expenses (housing, food, transportation, healthcare)
Factor: 12 months for lump sum offers, 24 months for periodic payment offers
Net Equity in Assets: Fair market value of your assets minus any loans or liens, then reduced by 20% to reflect quick sale value

Example: If your monthly disposable income is $180 and you have $4,500 in net asset equity, your lump sum RCP would be ($180 × 12) + $4,500 = $6,660. That figure is roughly the minimum the IRS would expect for your offer. A Tucson contractor with seasonal income may show a lower average monthly figure across the year, which can pull the RCP down.

OIC Eligibility Requirements

Before the IRS will even consider your Offer in Compromise, you must meet these basic requirements:

Filed All Required Tax Returns

You must be current on all tax filings. If you have unfiled returns, you'll need to file them before the IRS will process an OIC.

Made Current Year Estimated Payments

If you're required to make estimated tax payments — common for Tucson 1099 contractors and self-employed taxpayers — you must be current for the year you're applying.

Not in Open Bankruptcy

You cannot submit an OIC while you are in active bankruptcy proceedings in an Arizona court.

Paid Application Fee and Initial Payment

The OIC application requires a $205 fee (waived for low-income taxpayers) plus 20% of a lump-sum offer amount submitted with your application.

What Disqualifies You from an Offer in Compromise?

You Can Afford to Pay in Full

If your RCP calculation shows you can pay the full balance within the collection statute (usually 10 years), the IRS will reject your OIC.

Significant Asset Equity

Substantial equity in your home, vehicles, retirement accounts, or other assets can lead the IRS to conclude you could liquidate to pay your debt.

High Income Relative to Expenses

If your monthly disposable income is high enough to satisfy the debt through an installment agreement, OIC is unlikely to be approved.

Recent Asset Transfers

If you recently transferred property or accounts to relatives or others to reduce your net worth, the IRS may view it as a dissipated asset and reject the offer.

Offer in Compromise in the Pima County Context

Pima County's economy shapes how OIC applications play out. From Tucson and South Tucson to Oro Valley, Marana, and Sahuarita, the region's income patterns create both challenges and opportunities for taxpayers seeking a settlement:

University & Research Income

Many Tucson residents earn through the University of Arizona as faculty, researchers, or grant-funded 1099 contributors — income that can be irregular and end abruptly when a grant cycle closes.

Defense & Aerospace Contracting

Workers tied to Davis-Monthan AFB and Raytheon/RTX manufacturing sometimes carry contract or 1099 income with gaps between projects that lower average disposable income.

Tourism, Healthcare & Self-Employment

Seasonal tourism, healthcare schedules, and a large self-employed base produce variable monthly earnings that can strengthen an OIC when documented carefully.

With roughly 3,180 federal tax lien filings recorded in Pima County each year, the IRS is active across the Tucson metro. If you need to confirm filing details or set up an in-person appointment, the IRS Taxpayer Assistance Center serving the Tucson area operates by appointment only — you can schedule through IRS.gov or by calling 844-545-5640. Most Offer in Compromise packages, though, are submitted by mail rather than in person.

How to Apply for an Offer in Compromise

File All Required Returns

Make sure every required tax return is filed and that you're current on estimated payments for the year.

Complete the Form 656 Package

The OIC application includes Form 656 (Offer in Compromise) and Form 433-A (individuals) or 433-B (businesses) for financial disclosure.

Calculate Your Offer Amount

Use the RCP formula to determine the minimum acceptable offer for your Pima County household income and assets.

Submit with Payment

Include the $205 application fee and the initial 20% payment for a lump-sum offer, then mail the package to the IRS.

Wait for IRS Review

The IRS typically takes 6-12 months to review an OIC. During that time, most active collection efforts are paused while the offer is pending.

Frequently Asked Questions

What is the Offer in Compromise acceptance rate in Pima County?

The IRS accepts approximately 14.1% of Offer in Compromise applications nationally (5,464 of 38,797 submitted in FY2025, per the IRS Data Book 2025, Table 4-1). In Pima County, acceptance hinges on your Reasonable Collection Potential (RCP) — the IRS formula that calculates what you can realistically pay from income, assets, and allowable expenses. Tucson taxpayers with variable University of Arizona grant income or 1099 contractor earnings often present strong cases when their disposable income is genuinely limited.

How much can I settle my IRS debt for with an Offer in Compromise?

The settlement amount depends on your Reasonable Collection Potential (RCP): your monthly disposable income multiplied by a factor (12 or 24 months) plus the net equity in your assets. With an average Pima County tax lien around $26,800, applicants with high allowable expenses and limited asset equity sometimes settle for 10-25% of their total balance.

What disqualifies me from an Offer in Compromise in Arizona?

You may be disqualified if you are in an open bankruptcy, you have not filed all required tax returns, you have not made required current-year estimated payments, or your income and asset equity show you can pay the full balance within the collection statute. A licensed tax professional can review your Tucson-area situation before you apply.

Can I visit a Tucson IRS office to handle my Offer in Compromise?

The IRS operates a Taxpayer Assistance Center serving the Tucson and Pima County area, but it is by appointment only. You can schedule through IRS.gov or by calling 844-545-5640. Most Offer in Compromise applications, however, are mailed to the IRS using the Form 656 package rather than handled in person.

Find Out If You Qualify for an Offer in Compromise

Our $399 case review includes a full analysis of your IRS situation, an RCP calculation, and a clear recommendation on whether OIC is your best path in Pima County — or whether another resolution option makes more sense.