MVLS/Frost Law: Offer in Compromise: Settling Federal & Maryland Tax Debt for Less Than the Full Amount

An IRS Offer in Compromise lets a taxpayer settle a federal tax liability for less than the full amount owed under Internal Revenue Code § 7122. The program comes with strict eligibility rules, and tax preparers who file offers without understanding those rules often see them returned or rejected.

Frost Law attorneys Zachary Lyda and Darius Liely walk through the Offer in Compromise program from start to finish. The session covers who qualifies, the Low-Income Certification, and the three offer types the IRS recognizes: Doubt as to Collectibility, Doubt as to Liability, and Effective Tax Administration.

Zachary Lyda and Darius Liely explore how to calculate Reasonable Collection Potential and how to structure a lump-sum offer versus a periodic-payment offer. The session also addresses what happens when the IRS returns or rejects an offer and how the appeal process works.

The presentation includes a page-by-page walkthrough of the current 2026 IRS forms: Forms 433-A (OIC), 433-B, 656, 656-L, and 656-PPV. The session closes with a Maryland sidebar covering the state Comptroller's own Offer in Compromise program and how it compares to the federal process.

This session is built for CPAs, Enrolled Agents, and tax preparers who advise clients carrying federal or Maryland tax debt.