In general, an Offer in Compromise, or OIC, is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax debt for less than the full amount owed. However, an OIC is not a one type of compromise. Each taxpayer is unique. There are several factors that go into the process of an OIC that both the taxpayer and the IRS take into consideration.

The good thing about an approved OIC: Improved credit score— Once the OIC is resolved, the IRS will release all tax liens that they hold on you so you can move forward. Think of it as a new start from the IRS.

The process, however, can be involved. You will have to tell the IRS where you work, what bank you use, and what your assets are (such as your house, cars, valuables, etc.). The IRS will have to review everything from tax returns to bank statements to monthly bills. As grueling as it sounds, if the OIC is accepted, there is a light at the end of the tunnel and the issues will be resolved.

Unfortunately, there could be a chance where the OIC is denied. An OIC is generally not accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination of the taxpayer’s reasonable collection potential.