Congressional leaders have introduced a bipartisan tax bill aimed at speeding up the IRS Offer in Compromise program, a key tool for taxpayers struggling with tax debt. Released on January 30, 2025, the proposal seeks to reduce backlogs in the IRS collection process, shorten review times, and expand access to tax debt relief for eligible taxpayers.
The Taxpayer Assistance and Service (TAS) Act, introduced by Senate Finance Committee leaders Mike Crapo (R-ID) and Ron Wyden (D-OR), includes 68 provisions to improve IRS operations. Section 111 specifically targets the Offer in Compromise program, which allows taxpayers to settle their tax debt for less than the full amount owed.
Under current law, any compromise application involving unpaid taxes of $50,000 or more must undergo legal review by the IRS Office of Chief Counsel. According to the National Taxpayer Advocate, this blanket rule consumes more than 6,000 attorney hours each year, slowing the IRS collection process and creating delays that can harm taxpayers already facing financial hardship.
In fiscal year 2024 alone, the IRS Chief Counsel reviewed 46 criminal cases and nearly 3,000 civil cases where the total amount exceeded $50,000. Many of these reviews involved routine matters that rarely required specialized legal opinions. Section 111 of the new tax bill would change that system by giving the Treasury Secretary discretion to decide when legal review is necessary, focusing attorney resources on genuinely complex cases.
For taxpayers, the changes could shorten decision timelines and make it easier to resolve federal tax debts through a structured payment plan. The compromise program would continue to require detailed information on income, assets, and basic living expenses. Applicants must still file required tax returns and comply with all tax obligations. Options to resolve debt would include a lump sum settlement or monthly installments through an installment agreement, depending on financial condition and eligibility.
The Offer in Compromise has long been one of the IRS’s primary tools to help taxpayers settle their federal tax debts when paying the full amount would create financial hardship. Through the compromise program, the IRS evaluates income, assets, and basic living expenses to determine whether a taxpayer can reasonably afford to pay taxes in full.
Most taxpayers must demonstrate that extraordinary circumstances—such as a medical condition, long-term illness, or severe financial strain—prevent them from meeting their tax obligations. In these cases, the IRS may accept a reduced settlement, provided the taxpayer files all required tax returns and complies with future payments.
The taxpayer advocate service, an independent organization within the IRS, has repeatedly argued that delays in the IRS collection process place many taxpayers at greater risk. While waiting for a compromise application to be reviewed, individuals may face mounting penalties, interest, and even wage garnishment. Critics say this undermines the best interests of both taxpayers and the agency, as it delays resolution and increases the total amount owed.
The National Taxpayer Advocate praised Section 111 of the TAS Act, calling it a “commonsense improvement” that will allow the IRS to direct its legal resources toward complex cases rather than routine compromise applications. The office noted that faster reviews would help taxpayers settle their tax debt more efficiently and reduce unnecessary financial hardship.
Senator Mike Crapo, the Republican chair of the Senate Finance Committee, said the tax bill reflects a bipartisan effort to modernize the IRS collection process. “Taxpayers should not have to wait months or years for routine cases to clear the system,” Crapo said in a committee release. His Democratic counterpart, Senator Ron Wyden, added that the measure would strengthen taxpayer protections while ensuring the IRS focuses on issues that genuinely require legal expertise.
Tax professionals also see potential benefits. Many note that quicker reviews could reduce the risk of wage garnishment, lessen reliance on penalty abatement, and make it easier for taxpayers and businesses to resolve IRS debt before it grows larger. Some tax relief companies, however, stressed that taxpayers still need guidance when preparing a compromise application, since incomplete filings or missing tax returns can delay acceptance.
If enacted, the changes in the TAS Act could make it easier for taxpayers to settle their tax debt without lengthy delays. Faster decisions on compromise applications would give taxpayers more certainty about how to resolve debt and move forward with their finances. For most taxpayers, that could mean reduced interest and penalties, along with a clearer path to compliance.
The bill would not change eligibility rules. Taxpayers must still file all required tax returns, meet tax obligations, and submit detailed information on income, expenses, and assets before the IRS will consider a compromise. Payment options such as lump sum settlements or monthly installments under an installment agreement would remain available, depending on financial condition.
Experts recommend consulting a qualified tax professional before filing, especially if you owe money on federal tax debts or cannot afford to pay in full. Incomplete documentation, missed deductions, or failure to provide proof of extraordinary circumstances can lead to rejection. Taxpayers should also be cautious of companies promising guaranteed tax debt relief, as the IRS decides acceptance based on financial condition and whether the offer represents the best interest of the government.
For taxpayers seeking more guidance or preparing to submit a compromise application, official resources are available:
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