How to Prepare for a Tax Debt Settlement Consultation

A tax debt settlement consultation is most useful when you arrive with accurate information about what you owe, what you earn, what you spend, and what you own. It helps you understand whether an Offer in Compromise, payment plan, or another IRS option may fit your situation.

You do not need to have every document perfect before the first conversation. But preparing ahead can save time, reduce stress, and help you avoid paying for services you may not need.

Know What You Owe

Start by identifying the tax years, balances, penalties, and interest involved. You can check your balance and account information through your IRS Individual Online Account.

Bring or locate any IRS notices, tax returns, payment records, and correspondence related to the debt. These documents help a tax professional understand the full scope of the problem.

Review Your Financial Picture

The IRS considers income, expenses, asset equity, and ability to pay when reviewing an Offer in Compromise application.

Prepare a simple monthly budget that includes:

• Take-home pay and other regular income

• Rent or mortgage, utilities, food, transportation, insurance, and medical costs

• Debts and minimum monthly payments

• Bank account balances

• Property, vehicles, retirement accounts, and other assets

• Recent pay stubs, bank statements, and tax returns

The IRS uses Form 433-A for wage earners and self-employed individuals, and Form 433-B for businesses, to collect this financial information.

Check Your Eligibility First

Before paying for a consultation, use the free Offer in Compromise Pre-Qualifier Tool. It can help you check whether you may be eligible and prepare a preliminary proposal.

The tool is only a guide. The IRS makes the final decision after reviewing your complete application and financial circumstances.

Questions to Ask

Ask direct questions before agreeing to any paid service. A reputable professional should explain the options, the costs, and the realistic likelihood of approval.

Useful questions include:

• What tax relief options fit my situation?

• Am I likely to qualify for an Offer in Compromise?

• What documents will I need to provide?

• What are the total fees, and when are they due?

• Will you prepare and submit the forms, or only review my case?

• What happens if the IRS rejects the offer?

• Can I apply directly with the IRS instead?

Understand the Costs

An OIC application generally requires a $205 application fee and an initial payment. Some taxpayers who meet the IRS low-income guidelines may qualify to have these costs waived.

Ask any company or professional for a written explanation of its fees before you sign anything. Do not rely on promises that a settlement is guaranteed or that you will pay “pennies on the dollar.”

Bring the Right Mindset

A consultation is not a guarantee of debt forgiveness. It is a chance to review your finances, identify possible IRS options, and decide whether an OIC is realistic.

Be honest about your income, expenses, assets, and ability to pay. Accurate information matters because the IRS evaluates each application based on its own rules and your specific circumstances.

A Simple Preparation Checklist

Before your consultation, gather:

• Recent IRS notices or collection letters

• Tax returns for the years involved

• Pay stubs or proof of income

• Bank statements

• A list of monthly expenses

• Information about assets and debts

• Any prior payment plan or IRS correspondence

• Questions about fees, services, and next steps

If you decide to move forward, the Form 656 booklet includes instructions, financial forms, and a checklist to help ensure a valid OIC submission.