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Offer in Compromise —
Kings County (Brooklyn), New York

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

An Offer in Compromise (OIC) lets you settle your IRS tax debt for less than you owe. In Kings County, qualifying for an OIC could mean settling for a fraction of your balance. 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 Kings 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 against allowable expenses and adds your asset equity — and in Brooklyn those two factors pull in opposite directions: high property values raise your equity, while NYC's high cost of living raises your allowable expenses. A $399 case review determines whether OIC is your best option or another 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 amount offered represents the most they can realistically expect to collect within a reasonable period. This isn't a loophole — it's a legitimate program designed for taxpayers who genuinely cannot pay their full tax liability.

For Kings County taxpayers, an accepted OIC could mean settling for a fraction of your balance, depending on your financial situation. Brooklyn's booming construction sector, its deeply diverse community of small-business and immigrant-owned shops, and its enormous gig-economy workforce all create circumstances where people fall behind on taxes — often through no fault of their own. The IRS still applies strict eligibility rules and a specific formula to decide what it will accept.

The Reasonable Collection Potential (RCP) Formula

The IRS uses the RCP formula to determine the minimum amount it will accept for an Offer in Compromise. Understanding this formula tells you whether OIC is realistic for your Brooklyn situation.

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). In Brooklyn, these allowable amounts are high — which lowers this number.
Factor: 12 months for lump sum offers, 24 months for periodic payment offers
Net Equity in Assets: Fair market value of your assets minus loans/liens, then reduced by 20% (quick sale value). Brooklyn real estate often makes this number large.

Example: If your monthly disposable income is $200 and you have $5,000 in net asset equity, your lump sum RCP would be ($200 × 12) + $5,000 = $7,400. This is roughly the minimum the IRS would accept. Note how heavily Brooklyn home equity can swing this figure: a single property with significant equity can add tens of thousands of dollars to your RCP.

How Brooklyn Property Values and Cost of Living Pull Your RCP in Two Directions

The single most important thing to understand about an Offer in Compromise in Kings County is that two powerful local forces work against each other in your RCP calculation:

Real-Estate Equity Raises Your RCP

Brooklyn's high property values mean that equity in a brownstone, condo, co-op, or two- or three-family building counts directly against you. Because asset equity is added on top of your income component, a homeowner with substantial equity can have a much higher minimum offer — even if their monthly cash flow is tight. The IRS expects you to tap that equity before settling.

High Cost of Living Lowers Your RCP

On the other side, New York City's steep cost of living raises the IRS-allowable living expenses for Brooklyn residents — higher local and regional standards for housing, utilities, and transportation. Larger allowable expenses shrink your monthly disposable income, which lowers the income component of your RCP and can make a smaller offer acceptable.

The net result is highly individual. A Brooklyn renter with high allowable expenses and few assets may qualify for a very low settlement, while a homeowner sitting on significant equity may find the IRS expects far more. This is precisely why running the numbers before you apply matters so much.

OIC Eligibility Requirements

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

Filed All Required Tax Returns

You must be current on all tax filings. Many Brooklyn gig and 1099 workers have unfiled returns because no tax was withheld — those must be filed before submitting an OIC.

Made Current Year Estimated Payments

If you're required to make estimated tax payments — common for Brooklyn's self-employed and small-business owners — you must be current for the year you're applying.

Not in Open Bankruptcy

You cannot submit an OIC while in active bankruptcy proceedings.

Paid Application Fee and Deposit

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

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 amount within the collection statute (usually 10 years), the IRS will reject your OIC.

Significant Asset Equity

Brooklyn homeowners are especially exposed here: substantial equity in a home, brownstone, or multi-family building can lead the IRS to determine you should borrow against or liquidate assets to pay.

High Income Relative to Expenses

If your monthly disposable income is high enough to pay through an installment agreement, OIC may not be approved — even with NYC's elevated allowable expenses factored in.

Recent Asset Transfers

If you recently transferred a property or other assets to family members or others to reduce your net worth, the IRS may reject your offer.

Offer in Compromise in the Kings County Context

Brooklyn's economic profile creates both challenges and opportunities for OIC applicants:

Construction Boom Income Swings

Brooklyn's construction boom drives strong but uneven earnings. Slow stretches and seasonal layoffs can lower disposable income at the moment you apply, helping your OIC math.

Immigrant-Owned Small Business

Brooklyn's diverse, immigrant-owned small-business community often runs on thin margins. Legitimate business expenses can reduce apparent ability to pay and strengthen an OIC case.

Gig Workers with No Withholding

The borough's large 1099 and gig workforce sees no tax withheld from pay, so balances build quickly. Irregular income often supports a lower RCP than a steady salary would.

If you prefer to work with the IRS directly, the Brooklyn IRS Taxpayer Assistance Center serves Kings County by appointment only. Schedule through IRS.gov or by calling 844-545-5640 before visiting — walk-ins are not accepted.

How to Apply for an Offer in Compromise

File All Required Returns

Ensure all tax returns are filed and you're current on estimated payments — a frequent hurdle for Brooklyn's self-employed and gig workers.

Complete the Form 656 Package

The OIC application includes Form 656 (Offer in Compromise) and Form 433-A or 433-B (financial disclosure of income, expenses, and assets).

Calculate Your Offer Amount

Use the RCP formula — carefully accounting for both Brooklyn real-estate equity and NYC allowable living expenses — to set the minimum acceptable offer.

Submit with Payment

Include the $205 application fee and 20% of your offer amount for a lump sum offer.

Wait for IRS Review

The IRS typically takes 6-12 months to review OIC applications. During this period, most collection activity is paused.

Frequently Asked Questions

What is the Offer in Compromise acceptance rate in Kings 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 Kings County (Brooklyn), acceptance hinges on your Reasonable Collection Potential (RCP) — the IRS formula based on income, assets, and allowable expenses. New York City's high cost of living raises your IRS-allowable living expenses, which can lower the income side of your RCP and improve your offer.

Does Brooklyn real-estate equity hurt my Offer in Compromise?

It can. Brooklyn's high property values mean equity in a home, condo, or two-family building counts directly against you in the RCP asset calculation, which can raise the minimum the IRS will accept. At the same time, NYC's high allowable living expenses lower the income component. The net effect depends on your specific balance of equity versus disposable income, which is why a case review matters.

Can self-employed and gig workers in Brooklyn qualify for an OIC?

Yes. Brooklyn's large 1099 and gig-economy workforce often falls behind because no tax is withheld from their pay. Irregular and seasonal income can actually work in favor of OIC calculations during slower stretches. You must still have filed all required returns and be current on estimated payments before the IRS will consider your offer.

What disqualifies me from an Offer in Compromise in New York?

You may be disqualified if you are in an open bankruptcy, you have unfiled tax returns, you are not current on required estimated tax payments, or your income and asset equity show you can pay the full amount. Recent transfers of assets to reduce your net worth can also lead to rejection.

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 that weighs your Brooklyn real-estate equity against NYC allowable expenses, and a recommendation on whether OIC is your best path — or if another resolution option makes more sense.