By Dave Lieber, The Watchdog Columnist
The Dallas Morning News
(TNS)
Dale Allen of Greenville, TX, has a question for The Watchdog:
“I hear 10 or more advertisements per day on the radio for companies that will reduce or eliminate your unpaid income tax. Yesterday’s $100,000 tax due is reduced to $1,000. How do they get away promising these results?”
Excellent question.
When I see those ads, they make me feel a little like a chump.
I pay what I owe. So why do the people in the ads get away with paying a small amount on a big tax bill?
The answer is an Internal Revenue Service program called “Offer in Compromise.”
Under the right circumstances, the IRS really can agree to settle a tax debt for less than the full amount owed.
But there’s a giant catch:
You have to qualify.
So, who qualifies?
You can hire one of these companies or you do it yourself.
You lay out all the expenses and assets you have to the IRS, and if you match the national standard and lack excess money, you might get a reduction.
They check everything from how much you pay for gas, trash removal, property tax, insurance, credit cards and so much more.
Getting approved is very difficult. In fiscal year 2024, 33,000 delinquent taxpayers applied but only 7,000 got a deal. In the 2025 fiscal year, 39,000 applied but only 5,000 were accepted.
IRS warnings
What’s the main problem with this setup? Dozens of companies offer this service, but the IRS warns about these so-called “Offers in Compromise Mills.”
According to the IRS, some of these companies promise payments of pennies on the dollar. They offer aggressive radio and TV ads. They may take money from unqualified applicants.
As former IRS Commissioner Danny Werfel put it: “Taxpayers should be cautious of aggressive marketing that can mislead them. Many OIC mills charge steep fees, give false assurances, and can take advantage of taxpayers with empty promises that their tax debt will disappear. The result is often good money for bad results.”
‘Downright shady’
“Some companies are downright shady,” said Texas A&M law professor Bob Probasco. “Others may be overpriced.”
How badly, I asked?
A flat fee can be as high as $5,000, he said.
“It’s rare that people qualify,” said Southern Methodist University law professor David C. Gair. “You’ve got to be at poverty level. You’ve got to be destitute.”
He nicknames it “bankruptcy for taxes.”
The goal is to get some taxpayers to pay what they can, so the IRS gets at least something.
Avoid troubles
How to avoid problems. The IRS recommends checking the credentials of companies before signing. One way to do that is to conduct a web search of a company by typing in the name of the company in a search engine and asking about any troubles the company had in the past.
When I tried it for several companies, a bounty of lawsuits, customer complaints and government actions popped up.
This presents a challenge. Texas Tech University Professor Bryan Camp told me, “You can’t tell from advertisements if it’s a good company to work with or not. It’s hard to tell ahead of time.”
The cost
How much does this service cost? One company I shopped with shows how confusing the pricing can be.
The company, Tax Relief Advocates, told me the startup fee is $695. The salesperson didn’t mention that the IRS charges $205 to apply (although that fee can be waived for low-income applicants). The company also doesn’t inform you precisely about its so-called “resolution fee” which I was told is “around $2,500” depending on each individual case.
The company says it offers a money-back guarantee if it can’t get you a good deal.
Suckers?
“The IRS is pretty careful about doing this,” Camp said. “If you allow anyone to compromise, it’s making suckers out of all the people that are fully paying their taxes and are compliant.”
He added, “The IRS doesn’t want to give away the store.”
So, Dale Allen of Greenville, here’s the part the radio ads don’t emphasize:
The IRS really can settle a tax debt for less than you owe. But that doesn’t mean everyone with a $100,000 tax bill can make it disappear for $1,000.
The IRS looks at your financial life—your income, expenses, assets and ability to pay—before deciding whether to accept an Offer in Compromise.
In other words, there is no magic $100,000-to-$1,000 button.
There is a real IRS program. There are real tax professionals who can help taxpayers navigate it. And there are also a lot of advertisements designed to make the extraordinary sound routine.
Dale Allen asked a simple question. The Watchdog thinks a lot of taxpayers deserve a straight answer.
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© 2026 The Dallas Morning News. Visit www.dallasnews.com. Distributed by Tribune Content Agency LLC.
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Tags: Income Taxes, IRS, offer in compromise, tax debt, tax relief, Taxes
