Every federal Offer in Compromise is filed under one of two payment structures, and the choice changes your minimum offer by thousands before anything else is considered. A lump-sum offer multiplies your future income by 12; a periodic-payment offer multiplies it by 24 — the IRS literally charges double the future income for the convenience of paying over time. This page compares the two structures completely: upfront cash, in-review duties, total cost on identical finances, and the trap that kills periodic offers mid-review.
General tax information, not tax or legal advice. Both structures are defined on Form 656 and in 26 U.S.C. §7122.
| Lump-sum offer | Periodic-payment offer | |
|---|---|---|
| Future-income multiplier | ×12 months | ×24 months |
| Due with the application | 20% of the offer + $205 fee | First monthly payment + $205 fee |
| Payments during IRS review | None | Every month, on time — review can run 6–24 months |
| After acceptance | Balance in ≤5 payments within ≤5 months | Remaining balance over 6–24 months total |
| Total for identical finances | Lower | Roughly double the future-income component |
| Failure mode | Cannot raise the 20% + balance quickly | One missed monthly payment during review can sink the offer |
| (Fee and in-review payments are waived for certified low-income applicants under either structure — fee page.) |
Finances: home/car equity and cash give net realizable equity of $4,000; remaining monthly income after allowable expenses is $500.
Under §7122 (the definition Cornell reproduces), a periodic offer requires the instalments to keep coming while the IRS decides. Fail to make a required payment during evaluation and the IRS may treat the offer as withdrawn — your payments to date are kept and applied to the balance, the fee is gone, and collection resumes. There is no grace-period culture here: set the payment on autopay from a stable account and protect it like rent.
How long does an applicant have to pay the offer if accepted? Lump-sum: the balance within five or fewer payments over no more than five months after acceptance. Periodic: the balance within the schedule in the acceptance, no later than 24 months (Ohio AG’s FAQ poses this question to applicants; the federal terms above are Form 656’s).
Can I have an extension on offer payments after my offer has been accepted? The IRS FAQ acknowledges a narrow possibility: contact the IRS about a one-time extension in specific circumstances before you miss — post-acceptance payment terms are part of the compromise contract, and silent lateness risks default (after-acceptance rules).
Where do I send my payments? To the address specified in your acceptance letter / Form 656 instructions for your filing location — payments during review go with the offer’s processing centre (IRS FAQ). Never to the address on a general balance-due notice unless directed.
What should I expect after submitting an Offer in Compromise (OIC or offer)? Processing, possible document requests, and — for periodic filers — the continuing monthly payment duty until decision (timeline; IRS FAQ).
General tax information, not tax or legal advice. Sources: 26 U.S.C. §7122(c) payment structures; Form 656 and 656-B; LegalClarity and Clarity Tax Relief comparisons; IRS OIC FAQs (questions). Reviewed 2026-10-22.