To begin the process, all tax returns must be filed in accordance with the IRS. Gathering all your financial information is crucial in the process of filing for an OIC. It will let the IRS know what types of liabilities that you have, and what you could afford to pay. All payments to the IRS must be current for a year. There are two different options to choose from, and depending on what payment options you pick you must send in an initial payment of the offer along with the application, and then the IRS will review the application and make their decision. More than likely a Lien will be put against you while OIC is pending. Once OIC is accepted you may not have any balances on any future tax returns for the next 5 years, if you do it must be paid in full if. Failure to pay means your OIC will be considered defaulted and all penalties, interests, & fees will be reinstated. One thing that should be noted is the Federal Government and States are two separate entities and will evaluate their own OIC’s individually.