Can You Settle an IRS Levy with an Offer in Compromise?

Marc Boulanger • June 18, 2025

A person is holding a piece of paper that says `` irs offer in compromise ''.

Under Levy? An Offer in Compromise Could Be Your Path to Relief

If the IRS is actively levying your wages or bank accounts, you may feel powerless—but there's a legal way to settle your tax debt for less and stop future levies.

It's called an Offer in Compromise (OIC)—and if you qualify, it could resolve your IRS problem permanently.

In this post, we explain how the Offer in Compromise works in relation to IRS levies, when it stops enforcement, and what steps you need to take to use it as a solution.

Can You File an Offer in Compromise While Under IRS Levy?

Yes—but with important caveats.

If you are currently being levied (wages, bank account, etc.), you can still submit an OIC to settle your tax debt.

However:

The levy may not be immediately released just because you submitted an offer
You must include Form 656 and Form 433-A(OIC) or 433-B(OIC)
The IRS usually suspends collection action while your offer is under review

Does Submitting an OIC Stop the Levy Automatically?

No.

Filing an Offer in Compromise does not trigger an automatic levy release. However, IRS policy generally suspends enforcement activity once:

The offer is deemed processable
All required documents and fees are submitted
You are in full filing compliance

Until then, active levies—especially wage garnishments—may continue.

When Will the IRS Stop the Levy?

The IRS typically stops levy enforcement:

Once the offer is received and accepted for processing
After a Revenue Officer is assigned and reviews your financials
If your CPA or representative requests a temporary hold based on hardship

A formal levy release can be requested separately using:

IRS Form 911 (for Taxpayer Advocate intervention)
A hardship statement using Form 433-A
A direct contact with the assigned Revenue Officer

Will the IRS Accept My Offer?

The IRS will evaluate your offer based on Reasonable Collection Potential (RCP)—your:

Assets
Monthly income
Necessary living expenses
Future earning potential

If your offer reflects what the IRS could realistically collect, and you’re otherwise compliant, your OIC has a good chance.

What If the IRS Rejects My OIC?

If rejected:

The IRS may resume levy activity, especially if no other resolution is in place
You can appeal within 30 days using Form 13711
You can submit a revised offer if your situation changes

How to Use an OIC to Stop an IRS Levy

Step 1: Get into Compliance

All required tax returns must be filed before the IRS will process your offer.

Step 2: Complete OIC Forms

Form 656 (the offer)
Form 433-A(OIC) or 433-B(OIC) (financials)

Step 3: Submit with Payment

Include:

$205 application fee
Initial offer payment (unless qualifying for low-income exemption)

Step 4: Request Levy Suspension

Ask the IRS to pause enforcement during OIC review—especially for active wage levies or bank account freezes.

We Help Orange County Taxpayers Stop Levies with an OIC

At Boulanger CPA and Consulting PC, we:

Stop IRS levies quickly
Prepare and file your Offer in Compromise
Negotiate directly with Revenue Officers
Settle your IRS debt for a fraction of what’s owed

📞 Call (657) 218-5700 or request your OIC evaluation at
www.orangecounty.cpa

FAQ: Settling IRS Levies with an Offer in Compromise

Can I stop a wage garnishment with an OIC?
Yes—but only once the offer is accepted for review or if you request a manual hold.
Will the IRS return money already taken?
Unlikely—OICs prevent future levies but don’t reverse past ones.
Can I file an OIC while under audit or appeal?
Not usually. IRS must complete the audit or process first.
Will the levy resume if my offer is rejected?
Yes—unless you enter a different resolution immediately.

📣 About the Author

Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.

He is the author of Defend What’s Yours: A California Taxpayer’s Guide to Beating the IRS and FTB at Their Own Game, available now on Amazon. The book offers a step-by-step plan for resolving IRS and FTB tax debt without losing your business, your home, or your peace of mind.

With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.

Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.

Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.

📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.

< Older Post

Newer Post >