IRS Approved Fewer Compromise Offers in 2025
The agency accepted 5,500 tax debt settlements in 2025 as the volume of taxpayer applications rose significantly.
Updated on Oct. 5, 2026 in Taxes
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During fiscal year 2025, the Internal Revenue Service approved 5,500 offers in compromise to settle outstanding tax debts. This total represents a notable decline from the 12,700 offers accepted by the agency in 2023.
Why it matters
The offer in compromise program allows eligible taxpayers to settle their liabilities for less than the full amount owed based on their reasonable collection potential. Understanding the acceptance criteria helps taxpayers navigate the IRS debt resolution process.
In 2025, the IRS approved 5,500 offers totaling $98.1 million in value, with the average offer settling approximately $18,000 in debt. This stands against $214.5 million in total value approved in 2023.
The players
Internal Revenue Service
The Internal Revenue Service is the federal agency responsible for collecting taxes and administering the internal revenue laws of the United States.
The details
The IRS evaluates applicants by assessing their income, expenses, and total assets to determine their reasonable collection potential. Those who receive an approved offer are required to remain current on all tax filings for a period of five years following the agreement.
Timeline
The IRS approved 12,700 offers in compromise in 2023.
The IRS approved 5,500 offers in compromise during fiscal year 2025.
Market Dynamics
These figures reflect the operational throughput of the Internal Revenue Service offer in compromise program during shifting macroeconomic cycles. The data highlights how the agency manages its backlog compared to historical administrative benchmarks.
Taxpayers seeking debt relief must meet strict criteria based on their current financial assets and income capacity to qualify. Those who enter into an agreement must maintain consistent tax compliance for five years to avoid defaulting on the settlement.
The takeaway
Taxpayers should review their full financial documentation before applying for a settlement to ensure they meet the agency's specific collection potential requirements. Successfully entering the program requires long-term adherence to tax filing obligations to keep the settlement active.
Further reading
For more information on managing debt, visit the Taxes section.
Source note: This article includes information reported by RocketNews.
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