The Economic Times

IRS offer in compromise: 20 million Americans owe back taxes in 2026 - Who qualifies for tax debt settlement and how the IRS calculates your reduced payment eligibility

The IRS is managing more than $150 billion in back taxes this year. Many taxpayers are turning to the IRS Offer in Compromise to settle tax debt for less than they owe. Approval depends on your Reasonable Collection Potential. The IRS reviews your income, assets, and monthly expenses carefully. About 66% of applications are rejected. All past tax returns must be filed. Form 656 is required. Low-income hardship rules may help stop wage garnishment.