What is a virtual CPA?

A virtual CPA provides the same services as a traditional CPA firm — tax preparation, bookkeeping, audits, financial planning — but delivers them remotely using secure cloud technology. You get expert-level service without visiting a physical office.

How much do virtual CPA services cost?

Pricing depends on the complexity of your financial situation and the services you need. We provide transparent fee estimates during your initial consultation. Virtual CPA firms typically have lower overhead than traditional firms, which translates to more competitive rates.

Do I need an audit for my nonprofit?

Many states require nonprofits to have an independent audit once they exceed certain revenue thresholds, often $500,000-$750,000. Grant-making organizations and government agencies frequently require audited financial statements. We can help determine your specific audit requirements.

What is the difference between an S-Corp and an LLC for tax purposes?

An LLC provides liability protection and pass-through taxation by default. An S-Corp election can provide additional tax savings by allowing owners to split income between salary (subject to payroll taxes) and distributions (not subject to payroll taxes). The right choice depends on your income level, business structure, and state tax laws.

What does a virtual CFO do?

A virtual CFO (fractional CFO) provides high-level financial strategy and oversight on a part-time basis — budgeting, forecasting, cash flow management, financial analysis, KPI reporting, and strategic financial planning. You get C-suite financial leadership without the full-time cost.

Can you help if I'm behind on bookkeeping or taxes?

Yes. We offer catch-up bookkeeping services to bring your books current and can help resolve back tax issues including IRS notices, unfiled returns, and payment plans.

What accounting software do you work with?

We work with QuickBooks Online, Xero, FreshBooks, Wave, and other major cloud accounting platforms. We can also help you select and set up the best software for your business.

How do I prepare for tax season?

Organize financial records throughout the year, keep receipts for business expenses, track mileage and home office usage, make quarterly estimated tax payments, and schedule a year-end tax planning session before December 31.

What is DCAA compliant accounting?

DCAA (Defense Contract Audit Agency) compliant accounting is a system that meets federal government requirements for contractors. It includes proper timekeeping, job cost accounting, indirect cost allocation, and specific internal controls required for government contract work.

Do I need a CPA or a bookkeeper?

Bookkeepers handle day-to-day recording of financial transactions. CPAs handle higher-level work — tax planning and preparation, audits, financial analysis, and strategic advice. Many businesses need both. Our firm provides both services so you have one team managing everything.

What's the difference between an audit, review, and compilation?

An audit provides the highest level of assurance through independent verification of financial statements. A review provides limited assurance through analytical procedures and inquiries. A compilation presents financial information in statement format without assurance. The right choice depends on your stakeholders' requirements.

Do you serve businesses outside the DMV area?

Yes. While our primary service area is Washington DC, Maryland, and Virginia, we serve clients nationwide through our 100% virtual model. Our cloud-based systems allow us to work with businesses anywhere in the United States.

Who should and should not apply for an IRS Offer in Compromise?

You should apply if your reasonable collection potential (RCP) is genuinely lower than your total tax debt — meaning the IRS calculates it cannot collect the full amount given your income, allowable expenses, and asset equity. You should not apply if you have significant equity in assets, substantial disposable income, or if an installment agreement would allow you to pay the debt in full within the collection statute period. Many OIC applications are rejected because the taxpayer did not qualify under the IRS formula.

What if the IRS rejects my Offer in Compromise?

If the IRS rejects your OIC, you have 30 days from the rejection date to appeal to the IRS Office of Appeals. At Appeals, an independent officer reviews the examiner's RCP calculation and your supporting documentation. Many rejections are overturned or revised at the Appeals stage, particularly when the examiner made errors in calculating allowable expenses or asset equity. If Appeals also denies the offer, you can resubmit a new OIC or pursue alternative resolution.

How long does the IRS Offer in Compromise process take?

The IRS typically takes 6 to 12 months to process and decide on an OIC. Complex cases can take up to 24 months. During this period, the collection statute of limitations is paused (tolled), and the IRS will generally suspend active collection action while the offer is under consideration. You must continue filing and paying current-year taxes during this time.

Does the IRS pursue collection while my OIC is pending?

The IRS generally suspends enforced collection action (levies, garnishments) while an OIC is pending and for 30 days after rejection. However, the IRS may still file a Notice of Federal Tax Lien if it determines collection is at risk. Any pending levy must be released upon submission of an OIC unless the IRS determines the offer was submitted solely to delay collection.

What are the payment terms if my OIC is accepted?

An accepted OIC can be paid as a lump sum (paid within 5 months of acceptance) or through short-term periodic payments (paid within 24 months of acceptance). Lump sum offers require a 20% down payment with the application. Periodic payment offers require the first installment with the application. The IRS keeps your current-year refund regardless of the payment option you choose.

What is the difference between an OIC and Currently Not Collectible (CNC) status?

An OIC permanently settles your tax debt for a negotiated amount. Currently Not Collectible (CNC) status temporarily suspends IRS collection because you cannot meet basic living expenses and pay the IRS. CNC does not eliminate the debt — penalties and interest continue to accrue, and the IRS reviews your status periodically. An OIC is preferable when the collection statute expires before you can pay in full.

Last Updated: May 2026

IRS Offer in Compromise: How to Settle Your Tax Debt for Less

The IRS Offer in Compromise program allows qualifying taxpayers to settle their entire tax debt for less than the full amount owed. Only about 30–40% of submitted offers are accepted. Understanding the IRS's formula before you apply is the difference between a strategic filing and a wasted effort.

View IRS Resolution Services

What is an IRS Offer in Compromise and who qualifies?

An IRS Offer in Compromise (OIC) allows you to settle your tax debt for less than the full amount owed. The IRS accepts an OIC when it determines the offer equals the most it can reasonably expect to collect given your income, expenses, and asset equity. Roughly 30–40% of submitted offers are accepted. The IRS uses a formula called 'reasonable collection potential' to evaluate every offer.

Reasonable Collection Potential (RCP): Reasonable collection potential is the IRS's formula for calculating the minimum amount it will accept in an offer. RCP equals monthly disposable income multiplied by remaining months on the collection statute, plus net realizable equity in assets. The IRS will not accept an offer below this calculated amount.

IRS Offer in Compromise: Three Submission Bases

Feature	Doubt as to Liability	Doubt as to Collectibility	Effective Tax Administration
What it means	You dispute the tax is legally owed	You owe it but cannot pay in full	Paying in full would cause economic hardship
Most common type
RCP formula applies			Modified
Documentation required	Legal/factual dispute docs	Form 433-A + financials	Form 433-A + hardship evidence
Success rate	Higher (if valid dispute)	30–40% of submitted	Rare, narrow criteria

How to Submit an IRS Offer in Compromise: 4 Steps

1
Calculate your Reasonable Collection Potential (RCP)
Use IRS Form 433-A to document income, expenses, and assets. Disposable income equals monthly income minus IRS-allowed expenses (national standards for food/clothing/housing, actual amounts for transportation and health care). Multiply by remaining months on statute, then add net asset equity.
2
Complete IRS Form 656 (and 433-A)
Form 656 is the OIC application. Include your offer amount (must equal or exceed RCP), payment terms (lump sum or short-term periodic), and the basis for your offer. Attach Form 433-A with documentation and a $205 application fee (waived for low-income applicants).
3
Submit and wait (typically 6–12 months)
The IRS assigns your case to an offer examiner who verifies your financial information. During this time, the collection statute is paused. You must continue filing and paying current taxes. The examiner may request additional documentation.
4
Negotiate or appeal the IRS decision
If rejected, you have 30 days to appeal to the IRS Office of Appeals. An experienced CPA can often negotiate a revised offer or identify errors in the examiner's RCP calculation that affect the outcome.

Who Qualifies for an IRS Offer in Compromise?

The IRS has a pre-qualifier tool at irs.gov, but it is a rough screen — not a definitive answer. A proper qualification analysis requires a CPA to run the actual RCP formula with your real numbers. Generally, you may qualify if:

Your monthly disposable income (after IRS-allowed expenses) multiplied by the remaining collection statute period is less than your total balance owed
Your net realizable equity in assets (cash, investments, real estate equity, business assets) is limited
You are current on all required tax filings (no outstanding unfiled returns)
You are not currently in bankruptcy proceedings
You have made required estimated tax payments for the current year

Common disqualifiers include significant home equity, large retirement account balances, or monthly income that would allow repayment within the statute period through an installment agreement.

How the IRS Calculates Your RCP

The RCP formula has two components:

RCP = (Monthly Disposable Income × Remaining Collection Months) + Net Realizable Equity in Assets

Monthly disposable income is your monthly gross income minus IRS-allowed expenses. The IRS uses National Standards for food, clothing, and personal care (a fixed allowance by household size) and Local Standards for housing and transportation. Some actual expenses (health care, court-ordered payments) are also allowed. The IRS does not allow all of your actual expenses — only those it deems necessary and reasonable.

Net realizable equity in assets means the quick-sale value of your assets minus any secured loans. For real estate, the IRS uses 80% of fair market value minus the mortgage balance. For cars, IRAs, and brokerage accounts, the IRS uses actual value minus early-withdrawal penalties and secured loans.

If paying over a lump sum (within 5 months), the IRS multiplies disposable income by 12. If paying in installments over 24 months, the multiplier is 24. Your CPA will calculate both scenarios to determine the lowest possible offer amount.

What Happens After Your OIC Is Accepted

Once the IRS accepts your offer:

You must pay the agreed amount according to your payment terms (lump sum within 5 months, or installments within 24 months)
You must file all required tax returns on time and pay all taxes for the next 5 years
The IRS keeps any tax refund due in the year of acceptance (and any year the offer covers) — this is not applied to your offer amount
Any federal tax liens filed before acceptance remain until the offer amount is paid in full, then the IRS releases them within 30 days
If you default on the terms within 5 years, the IRS can reinstate the full original tax debt minus payments made

Frequently Asked Questions

Explore all IRS resolution strategies including installment agreements, tax lien removal, and audit representation on our IRS Tax Resolution Services page.

Need Help With Your IRS Issue?

Our licensed CPAs run the actual IRS RCP calculation with your real numbers — so you know before you apply whether an Offer in Compromise is worth pursuing or whether another resolution strategy is better for your situation.