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Under certain circumstances IRS may agree to resolve the taxpayer's tax liability by accepting less than full payment, especially if they are convinced that can't collect the full taxes. An offer in compromise (OIC) is an agreement between a taxpayer and IRS to settle tax liability.

The minimum offer amount must generally be equal to, or greater than, a taxpayer's realizable value in real and personal assets, plus future income. Taxpayers may choose to pay the offer amount in a lump sum, or a period time. Longer period will require a larget offer amount and hence it is better to pay off in the shortest time possible.

IRS made changes to the Offer in Compromise payment option. For an all-cash Offer in Compromise, the IRS now requires a 20 percent deposit. If your Offer in Compromise is set up as an installment plan, there is no deposit; however, your first payment will be due immediately.