An offer in compromise asks the IRS to take less than you owe, usually because you cannot pay in full. For a Baltimore household, the smallest offer the IRS will generally accept depends partly on the living costs it allows. For housing, it lists Baltimore City apart from Baltimore County, and the city's figures are lower.
Michael March and our Baltimore office work through those figures with you, along with any debt you owe the Comptroller of Maryland. For the rules that apply everywhere, see how an offer in compromise works.
What the IRS allows for Baltimore living costs
The IRS gives Baltimore City its own line in its Maryland table of housing and utility allowances. The city's figures are lower than those for the counties around it. Under the standards in force since June 29, 2026, a family of four in the city can claim up to $2,558 a month. The same family could claim $2,862 in Baltimore County, $3,336 in Anne Arundel County and $3,998 in Howard County.
The figure works as a cap. The IRS allows what you pay or the local figure, whichever is lower, unless you show the extra is needed for basic living expenses. For owners, the figure also has to cover property tax, insurance and repairs.
Transport costs are set differently. Car running costs are capped at one figure for the whole Baltimore area, the city and six counties: $299 a month per car in 2026. A household with no car gets $220 a month for transit without being asked what it spends. Income taxes you pay now count as costs too, including Maryland's and the city's local income tax.
How those costs change your offer
The IRS works out a minimum offer from two things. One is the equity in what you own. The other is the income you have left each month after those costs. It calls that minimum your reasonable collection potential.
So a cost the IRS won't allow usually raises the minimum. It multiplies your leftover monthly income by 12 for a lump-sum offer, paid in five months or less. For a periodic payment offer, paid over 6 to 24 months, it multiplies by 24. Each $100 a month of housing cost it disallows generally adds $1,200 to a lump-sum offer, or $2,400 to a periodic one. The choice also decides how long you keep paying.
Most offers we see in Baltimore rest on doubt as to collectibility: your income and assets together fall short of the debt. We check your financial statement against these figures before you sign it.
What changes when you also owe Maryland
A federal offer settles only your IRS debt. A balance with the Comptroller of Maryland stays until you resolve it on its own terms. The two debts still interact, though: the IRS can count a monthly payment on the Maryland debt as an allowed cost, as the questions below explain.
Maryland has its own offer program, run by the Comptroller. It asks for applications by email and warns that mailed ones take longer. A Maryland resident's paper federal offer goes instead to the IRS's offer unit in Memphis. Individuals can also apply through their IRS online account.
The Maryland program differs from the federal one in three ways that matter:
- The Comptroller keeps collecting while it reviews your offer.
- Its decision is final, while you can appeal an IRS rejection.
- A late return or payment in the three years after acceptance can undo a Maryland deal; for the IRS, the period is five years.
Maryland law also allows a tax claim to be settled for less when the state agrees the full amount cannot be collected (Tax-Gen. § 13-816). Our Columbia page sets out the Maryland program's entry conditions.
What to weigh before and after you file
An offer is not always the right tool. Generally, the IRS won't accept one if you could pay in full through a payment plan, the equity in what you own, or both. In that case, an installment agreement is the usual route. If you can pay nothing now, currently not collectible status may put collection on hold, though interest keeps growing.
The IRS will not consider any offer until your required returns are filed. So missing returns come first; see unfiled returns in Baltimore. If the IRS rejects your offer, you have 30 days from its notice to appeal to the IRS Independent Office of Appeals, in writing.
Common matters we handle
- Doubt as to collectibility offers for Baltimore households whose income and assets fall short of their IRS debt
- Housing and utility costs above the IRS figure for Baltimore City, and the records that support them
- Choosing between a lump-sum offer and a periodic payment offer
- Installment agreements or currently not collectible status, where an offer does not fit
- Replies to IRS counteroffers, and appeals of rejected offers
- Federal offers for people who also owe the Comptroller of Maryland, and offers under Maryland's own program
Why taxpayers choose Whiteford
- Local to Baltimore, and experienced in resolving both IRS and Comptroller of Maryland debt
- Financial statements checked line by line against the IRS's national and Baltimore standards before you sign
- Offers prepared from the start with a possible counteroffer or appeal in mind