Offer in Compromise

Offer in Compromise for Self-Employed

Freelancing and independent work come with unique tax challenges. If you've fallen behind, an OIC could help you settle for less and start fresh.

Check If You Qualify

Why Self-Employed Face Tax Problems

When you're self-employed, you're responsible for both the employer and employee portions of Social Security and Medicare taxes—that's 15.3% right off the top, before income tax. Add inconsistent income, unexpected expenses, and the complexity of quarterly estimated payments, and it's easy to see how tax debt accumulates.

The good news? An Offer in Compromise lets you settle your tax debt for less than you owe. The IRS looks at your Reasonable Collection Potential (RCP)—what they think they can realistically collect from you based on your income, expenses, and assets.

Common Tax Issues for Self-Employed

Self-Employment Tax

The 15.3% SE tax catches many by surprise. It adds up fast, especially in good income years.

Quarterly Estimates

Missed or underpaid quarterly payments lead to penalties that compound your debt quickly.

Income Fluctuation

Feast-or-famine income makes it hard to budget for taxes consistently.

Multiple Years Unfiled

Overwhelmed by complexity, some don't file for years—creating a bigger problem.

How Offer in Compromise Works for Self-Employed

OIC Advantages for Self-Employed:

  • Variable income can lower your "future income" calculation
  • Business expenses reduce your disposable income
  • Equipment and tools may have minimal equity value
  • Economic downturns in your industry support hardship claims
  • Settle for a fraction of what you owe

What You'll Need:

  • All tax returns filed (we can help with this)
  • Current on estimated tax payments
  • Detailed income and expense documentation
  • Financial records for the past 12 months
  • $205 application fee + 20% of offer amount

Other Options for Self-Employed Tax Debt

Installment Agreement

If you don't qualify for an OIC, a payment plan lets you pay your full debt over time in manageable monthly amounts.

  • Stops collection actions
  • Predictable payments
  • Easier to qualify

Currently Not Collectible

If you can't afford any payments right now, CNC status pauses collections until your situation improves.

  • No payments required
  • Collections paused
  • Time to stabilize

Penalty Abatement

If this is your first tax issue or you have reasonable cause, you may qualify to have penalties removed.

  • Reduce total owed
  • First-time relief available
  • Reasonable cause options

Not sure which option is best? Compare OIC vs Installment Agreement

Ready to Resolve Your Tax Situation?

Take our free 2-minute assessment to understand your options.

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No obligation. 100% confidential.