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Fintech Roundup: The gloves are off in the spend management space



Welcome to my weekly fintech-focused column. I’ll be publishing this every Sunday, so in between posts, be sure to listen to the Equity podcast and hear Alex WilhelmNatasha Mascarenhas and me riff on all things startups! And if you want to have this hit your inbox directly once it officially turns into a newsletter on May 1, sign up here.

If it feels like we’ve been over-indexing on expense/spend management news, it’s because there has just been so darn much of it.

Last week, I covered Brex’s big push into software, which means that its revenue generation will be more diversified as it will now be making money off of interchange fees and recurring revenue from subscriptions to its software. It also said it is placing greater emphasis on moving upmarket to serve larger customers.

As evidence of that, Brex revealed that DoorDash — a $36 billion in market cap company — was one of the first customers who’d taken a bet on its new spend management software product, Empower.

Coincidentally, the same day, Emburse — a nearly $200 million-in-ARR expense software company — announced it was doing the exact opposite. That company said it is making a big push into the SMB space and going head-to-head with fast-growing startups like Brex and Ramp.

The number of players in this space just keeps expanding, and one founder I spoke with — Zact CEO John Thomas — considers the sheer size of the B2B payments space to be the driving factor. The market is $25 trillion in the U.S. alone, with corporate cards making up 4%, or $1 trillion, of that total.

He shared with me where his startup is positioned in the Wild Wild West of expense management. Zact says it is focused squarely on the requirements of mid-market companies: bank-grade fraud protection, budget controls, approval workflow and accounting integration with “flexible payment type and funding support.” Airbase is another player in the space focused on mid-market companies.

Lending, however, is an area in which Thomas says Zact “refuses to play.” “We rely on the banks to do the lending, and we integrate with whatever funding solution they provide,” he told TechCrunch. “In the rush to grab market share, many fintechs are issuing credit to companies with dubious creditworthiness. We’re already seeing aggressive lending biting many of the credit card and BNPL providers.”

Thomas adds that expense management is only part of a company’s non-payroll spend management. 

“We’ve built an API ecosystem that goes beyond card interfaces to include expense management, controls, accounting integration and more,” he said. “So everything you need as a customer — we have APIs for.”

Zact’s choice of card issuing processor, Fiserv, also fits in with its bank-grade strategy. “Running on a legacy processor like Fiserv gives us stability, reliability and fraud protection,” Thomas said.  Controlling the transaction from the issuer to the card network through its processing partner further enables Zact to capture all of the interchange and share more of it with its partners and customers, he added.

Brex co-founders Henrique Dubugras (L) and Pedro Franceschi (R)/Brex

Huh. Interesting. Like Emburse, Zact seems more keen on partnering with financial institutions, rather than compete with them — another example of divergent strategies in the space. It also claims to be able to keep all interchange, and not just some. Historically, some of these companies relied primarily on interchange fees for revenue (Ramp and Brex), some relied on software subscriptions (Airbase and Emburse) and now an increasing number are betting on both (Ramp, Brex, Emburse and Zact).

At first, Brex and Ramp were focused on startups — now they’re both moving upmarket to serve larger customers. Airbase and Zact are focused on the mid-market while Emburse claims to be able to serve them all, with separate products. It’s enough to make one’s head spin. But wait, there’s more.

Meanwhile, a relatively new player in the space, TripActions, shared with me some stats around its recent growth. It’s “new” in the sense that when the pandemic hit in March of 2020, and corporate travel essentially came to a halt, the company pivoted to its general expense management product, TripActions Liquid. It tells me that “in response to demand,” it just launched the ability for SMBs and growth-stage companies to self-sign up — and has had “more than a thousand companies sign up in less than a month.” Examples of new customers include Notion, Skydio and Patreon. And, a number of companies that were customers of its travel expense product have also signed on to TripActions Liquid. Those include Carta, Amplitude, Loom, Lattice and Canva.

So now, TripActions — which was once more focused on enterprises — is also going after SMBs and growth-stage companies. Like Emburse.

The company reports that business travel bouncing back contributed to a 220% increase in travel spend from January to March 2022 — up 1,650% year-over-year. Overall, it added, transaction volume processed via TripActions Liquid more than doubled (by 107%) from January 2022 through March 2022, up 1,231% year-over-year.  In a statement to me, TripActions Liquid EVP/GM Michael Sindicich said: “It’s clear that other entrants to the space are starting to realize that in a post-COVID world, you cannot only offer expense. Fintech enablers really accelerated during the pandemic, when business travel was on pause, and they made it so easy to build a corporate card company however, now that business travel has returned, if those companies want to scale and provide true value, they’ll need to have travel — it’s why you now see new entrants playing catch up and offering pseudo-travel products. Considering 70% of expenses happen in some way shape or form around travel, offering a card with basic spend limits just isn’t enough.”

His statement is an obvious slam against some of its competitors that have expanded — or plan to expand — into travel and an implication that since that’s what TripActions started out doing, it must be able to do it better.

While most of the players I talk to claim this is not a winner-takes-all space, it sure does feel like there is a lot of mud-slinging going on.

Meanwhile, London.-based Capital on Tap — a company that describes itself as a competitor to Ramp — told me that it has closed on a $200 million funding facility so that it can continue to fund SMBs. It has opened a new office in Atlanta to fuel its “explosive” U.S. growth. Capital on Tap says it has provided access to more than $5 billion of funding for more than 125,000 small and medium businesses across the U.S. and U.K.

So, let’s add one more to the list. Or shall I say, ring.

Silly skeptics, cryptos for kids!

This section is brought to you by the very talented Anita Ramaswamy.

There are plenty of fintechs already capitalizing on surging interest in cryptocurrency among adults. Now, some startups are aiming to capture a new market altogether: children. 

Step, a Series C fintech app providing banking services to teenagers, announced last week that it will be offering a new product that will enable its 3 million-plus users to invest in equities and cryptocurrencies on its app. The company plans to launch the new product, Step Investing, sometime early this summer.

Crypto investing has been the top-requested feature from Step customers, CEO and co-founder CJ MacDonald told TechCrunch. 

Step Investing’s offering, built with the Zero Hash API, will allow customers to trade over 50 cryptocurrency tokens as well as NFTs. It will also offer staking and other decentralized finance (DeFi) tools, the company says. Each user will have their own crypto wallet address through Step, through which they can deposit and withdraw currencies on-chain.

The 18-month-old startup already offers bank accounts, credit cards and a peer-to-peer payments platform to teenagers, whose parents legally own the accounts. Step’s app is free for customers, while the company makes revenue through interchange fees on transactions, MacDonald said.

Step isn’t alone in marketing crypto to the under-18 crowd. Investing app Onu launched custodial accounts for children with access to 22 cryptocurrencies last month, and children’s social network Zigazoo started dropping NFTs last week. And earlier this year, Acorns CEO Noah Kerner told TechCrunch that the startup plans to include “no more than 5% exposure” to crypto as an option for customers who would like to participate, according to Kerner, who emphasized there “will not be crypto trading on the Acorns platform.” There are even crypto-focused summer camps popping up all over the country to educate children about the asset class, Vox reported.

While the idea of exposing children to one of the most volatile and risky asset classes may raise some eyebrows, MacDonald said he isn’t concerned about kids on Step Investing making reckless decisions like YOLO-ing all their birthday money into Dogecoin. He added that parents will be able to set spending and investing limits on their children’s accounts so kids can’t “go out of control.”

“A big part of our goal with our core product, as well as things like, giving [kids] access to invest, or learn what it means to invest, is to do that in a responsible way, and put guardrails on it and protect them, so they can’t make costly mistakes,” MacDonald said.

For more crypto news on a regular basis, sign up for Lucas Matney and Anita Ramaswamy’s upcoming crypto-focused newsletter/podcast, Chain Reaction, here.

On to fundings

Since we’ve been on the topic of spend management…I wrote about a newcomer called Winden, which former Apple Card designer Daniel Sathyanesan founded last August with the aim of building a neobank that offers deposit banking, spend management and other financial products for solo digital entrepreneurs.

Image Credits: Founder and CEO Daniel Sathyanesan / Winden

Accel led its $5.3 million seed raise, which also included participation from some other high-profile investors, including the venture fund of spend management startup Ramp; Sheel Mohnot, co-founder of Better Tomorrow Ventures; Lachy Groom and founders of a number of fintech unicorns such as Deel co-founder and CEO Alex Bouaziz; Ramp co-founder Karim Atiyeh; Pipe co-founder and CEO Harry Hurst; Klayvio co-founder Ed Hallen as well as Tarek Mansour, co-founder and CEO of Kalsh.

Welcome Tech, a startup aiming to build “an operating system” for immigrant families in the U.S., raised $30 million in new capital to help these individuals not only adjust to, but feel comfortable and “thrive” in their new environment. TTV Capital led the raise. Welcome Tech co-founder, CEO and president Amir Hemmat says his company’s initial approach was different than others in the space in that rather than launch a banking product and then set out to earn the trust of the community it aims to serve, it first “worked hard to earn that trust and understand the community’s needs.”

Meanwhile, dollars continue to flow to African fintechs. Umba, a digital banking platform operating in Lagos, Nigeria, raised $15 million in Series A funding, reports our man-on-the-ground, Tage Kene-Okafor.  The news came almost two years after the fintech raised a seed round of $2 million.

Moving over to Europe, Ingrid Lunden wrote about London-based Stenn — which applies big data analytics and matching them up against an algorithm to determine eligibility for a loan of up to $10 million; and on the other side taps a network of institutions and other big lenders to provide the capital for that financing. The company raised $50 million in equity funding to expand its business after seeing accelerated growth at a $900 million valuation.

Also in the U.K., Wagestream, known best for working with employers to enable salary advances for employees by way of an app, raised $175 million, money that it will use to continue adding in more features to the app, and to fuel a big push into the U.S. market.

In India, Manish Singh reports that neobank Fi is in advanced stages of talks to raise about $100 million at a $700 million valuation, according to multiple sources familiar with the matter. The deal hasn’t closed yet, so the terms may change, those sources cautioned.

On the insurtech front, insurance brokerage platform Newfront announced a $200 million investment at a $2.2 billion valuation led by Goldman Sachs Asset Management and B Capital with participation from existing investors including Founders Fund and Meritech Capital, reported Insurance Journal. Newfront said it plans to grow its technology teams and focus on harnessing data-driven insights for clients. The company also plans to expand across the U.S.

Ugami, a Miami-based, self-described “Latine” startup offering a financial rewards solution for gamers, announced that it closed a $4.8 million seed round co-led by Harlem Capital and ULU Ventures. In conjunction with the financing round announcement, the startup launched a closed beta for its inaugural Ugami Debit Card and app. A reported 265,000 gamers are on the waitlist, according to Refresh Miami.

Splitero, a financial service company providing homeowners options to access their home equity, announced raising a $5.8 million seed round and securing more than $1 billion in financing, reported FinLedger. Founded by two fintech veterans, CEO Michael Gifford and COO David Zvaifler, the company seeks to help consumers combat inflation and rising home expenses with their home equity through lump-sum cash transactions in exchange for a share of their home’s appreciation.

Speaking of real estate, here’s a deal that I missed from the week before that is quite interesting. Vontive, an “embedded mortgage platform for investment real estate” that just came out of stealth, secured $135 million — $25 million of venture capital and $110 million of debt — in a Series B round to scale its business. Anita Ramaswamy tells us all about how the company — which was founded by a former Palantir engineer and a Freddie Mac exec — wants to be the “Palantir of real estate investing.”

One more I had failed to include last week: As more people moved to remote work over the past few years, there was also an uptick in people choosing freelance or contract work, leaving companies to figure out how to manage that worker segment. The latest to receive funding to continue developing its financial infrastructure for the freelance economy is Archie, which raised $4.5 million in funding. Christine Hall gives us all the details.

In other news

Deel, a startup which helps companies pay people remotely globally (among other things) that we’ve reported on several times, revealed that it has crossed $100 million in ARR. We love the transparency! Alex Wilhelm breaks down its significance in this TC+ piece here.

Entrepreneur Amanda Peyton has always been “the friend that’s good with money,” whether as the treasurer of her high school at age 16 or today as the founder of Braid, a company that wants to make shared wallets more mainstream among consumers. Natasha Mascarenhas reports on how the group-financing platform Braid is trying to make transactions work for various entities, from shared households to side hustles to creative projects.

Is Stripe cheap at $95 billion? Happily, Stripe put out a mostly data-free 2021 update letter this month that includes just enough information for us to get dangerous with. With some creative math and,,,fair extrapolation, we can derive valuation calculations for Stripe that should help us better understand how well the payments juggernaut busy masquerading as a private company priced its last equity round. Alex examines here.

What if you could buy a Peloton with pre-tax dollars? How about vitamins and supplements? Skincare products? Or even mattresses and massages? All of those items might qualify as purchases you could make through a Flexible Spending Account (FSA) or Health Savings Account (HSA). Ami Kumordzie, a doctor who earned both her MD and MBA at Stanford, came to this realization when her mother lost her job during the pandemic. Kumordzie helped her mother find ways to spend the money so she didn’t lose it entirely, an experience that sparked Kumordzie’s idea to last year launch Sika, a fintech marketplace that allows customers to pay for qualified products at the point-of-sale using FSA and HSA funds. Anita Ramaswamy gives us the scoop here.

Speaking of scoops, I reported this week that is gearing up for yet another round of layoffs, according to multiple sources. This might be one of the few times I actually hope I’m wrong. I heard that the company will be laying off members of the Better Real Estate team and people who work in its refinance department. It is not yet clear how many staffers will be impacted by the potentially fresh round of layoffs, but it is believed to be in the “hundreds.” It would mark the third mass layoff for the company since December 1. 

Image Credits: Lawrence Murata and Alice Deng, co-founders of Slope / Slope

Christine Hall reported on how Slope, which provides businesses an easy way to offer buy now, pay later services, has had a busy six months. Company founders Alice Deng and Lawrence Murata told Christine that since its $8 million seed round announced last November, Slope saw around 121% growth month over month and signed up enough enterprise customers to grow more than 20 times in the quarter, while its waitlist grows each week.

Everyware, an Austin-based contactless payments startup, released news of its Pay By Text functionality, which allows customers to use their cell phone number to make a payment. Through its collaboration with Visa, Everyware says it is leveraging Token ID, giving the company the ability to “act as a token requestor requesting network tokens on behalf of its clients and enabling its customers to pay with just a cell phone number across merchants and payment processors, wherever Visa is accepted.”

Plaid announced it has hired Ripsy Bandourian as its head of Europe to lead the company’s expansion throughout the continent. She joins Plaid from, where she worked for eight years across a variety of senior-leadership roles in product, marketing, strategy and, most recently, partnerships. You can read more about the news on Plaid’s blog.

Arc launched a new product called Runway. Runway, it says, uses its proprietary ML-enriched underwriting algorithm to analyze net cash burn and cash on hand. Within 24 hours, it claims, founders are provided “flexible, low-cost capital with zero dilution or debt, enabling continued operations and financial stability during volatility.” I covered the company’s emergence from stealth last year with $150 million in debt financing and $11 million in seed funding. At that time, Arc told me it was building what it describes as “a community of premium software companies” that gives SaaS startups a way to borrow, save and spend “all on a single tech platform.”

Deserve, a fintech company that says it is “transforming credit cards into software that lives on mobile and in the cloud,” announced it has launched an offering “that empowers banks and B2B companies to launch corporate credit and charge cards.” The startup raised $50 million last June.

Another piece I couldn’t not include: An inside look at a Ukranian fintech startup adapting to life during wartime.

Last but not least, there was talk that Australian buy now, pay later giant Afterpay may have reason to doubt its decision to pay $29 billion for Square last year. The Sydney Morning Herald reported on April 12, 2022 that Afterpay “recorded a huge blowout in its half-year losses after a surge in bad debts and other operating costs failed to offset a big increase in the group’s revenue.” Meanwhile, there was speculation that Affirm, a U.S.-based provider of “Buy Now, Pay Later” financing, may be a takeover target.

Well, that’s it for this week. I think that was my longest edition ever. Once again, thanks for reading, and I hope you have a wonderful holiday weekend.


Bonds See 2023 Recession, Stocks Aren’t So Sure



The yield curve is one of the most robust recession predictors and has signaled a recession may be coming since mid 2022. In contrast, U.S. stocks as measured by the S&P 500 are up materially from the lows of last October and only just below year-to-date highs, seemingly rejecting recession fears. Yet, fixed income markets see the Fed potentially cutting rates by the summer, perhaps reacting to a U.S. recession.

The Evidence From The Bond Markets

The recessionary evidence, at least from fixed income markets, is mounting. The 10 yield Treasury yield has been below the 2 year yield consistently since last July. That is is called an inverted yield curve and has signaled a recession fairly reliably when compared to other leading indicators.

Building on that, fixed income markets see almost a nine in ten chance that the Federal Reserve cuts rates by September of this year. That’s something the Fed has repeatedly said they won’t do on their current forecasts. Yet, a recession could cause it to happen.

The Stock Market

In contrast, the stock market shows some optimism. The S&P 500 is up 7% year-to-date as the market has shrugged off fears of contagion from recent banking issues. In particular, tech stocks have rallied.

In contrast, more defensive sectors such as healthcare, utilities and consumer goods have lagged in 2023. This suggests that the stock market is taking more of a ‘risk on’ position and is perhaps less worried about the economy.


That said the stock market is a leading indicator of the business cycle, it may be that stocks see a recession, but are now looking past it to growth ahead and are factoring in the lower discount rates that a recession might bring as interest rates decline. Also, the U.S. stock market is relatively global, so the fate of the U.S. economy is a key factor in driving profits, but not the only one.

What’s Next?

Monitoring unemployment data will be key. Though the yield curve is a good long-term forecaster of recessions it is less precise in signaling when a recession starts. Unemployment rates can offer more accurate recession timing. Unemployment edged up in February, suggesting a recession may be near, but we’ve also seen monthly noise unemployment. Two similar monthly unemployment spikes during 2022 both proved false alarms.

However, if we see a sustained move up in unemployment from the low levels of 2022 that may be a relatively clear sign that a recession is here. Economist Claudia Sahm estimates that a sustained 0.5% increase in unemployment rate from 12-month lows is sufficient to trigger a recession. Unemployment rose 0.2% from January to February 2023, so maybe we’re on the way there. Of course, the jobs market performed better than expected in 2022 and it could do so again. Still, fixed income markets do suggest a 2023 recession is coming. Stock markets don’t necessarily share that view.

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Which States Have The Highest And Lowest Life Expectancies?



There’s a wide variance of life expectancies among the 50 states in the U.S., according to a recent report prepared by Assurance, an insurance technology platform that helps consumers with decisions related to insurance and financial well-being.

Figure 1 below shows the 10 states with the highest life expectancy, starting with Hawaii, the state with the highest life expectancy.

Figure 2 below shows the 10 states with the lowest life expectancy, starting with Mississippi, the state with the lowest life expectancy.

Assurance scoured life expectancy data prepared in January 2023 by the U.S. Centers for Disease Control and Prevention (CDC). With this data, Assurance created several easy-to-understand graphics that offer information about life expectancies.

Life expectancies are a basic measure of well-being

As measured by the CDC, life expectancies are a basic measurement of well-being in a broad population and not a prediction of how long an individual might live. The CDC measures the expected lifespan for a person born in the year of measurement. This measurement is calculated based on the assumption that the individual will live and die according to the rates of death that are prevalent in the measurement year for each age. There’s no assumed improvement or backsliding in the assumed mortality rates in future years for each age in the life expectancy calculation.


By contrast, an estimated lifespan for an individual would consider their current age, their gender, and some basic lifestyle information. It might also attempt to project future improvements or backsliding in mortality rates based on key factors.

Significant influences on life expectancy calculations

Leading causes of death in the U.S. are heart disease, cancer, and accidents in that order. These immediate causes are significantly influenced by factors in the population such as poverty rates, educational attainment, rates of obesity and smoking, access to healthcare, prevalence of violent crime, and the support people receive from federal, state, and local governments. All these factors can vary widely among different states, which can be a key reason why life expectancies vary by state.

When you think about it, all these factors also have the potential to influence a person’s quality of life. The measured life expectancy rate rolls up all these factors into one objective measurement of well-being that’s based on population data.

In addition to the factors listed above, mortality rates increased and life expectancies decreased in the past few years due to the Covid-19 pandemic. A recent article titled “Live Free And Die” summarized recent research results that show that life expectancies in most countries around the world rebounded after the Covid-19 pandemic but that they continued to decline in the United States. Many of the reasons cited in the article for the continued decline in U.S. life expectancies are the same or similar to the factors listed above.

NPR‘Live free and die?’ The sad state of U.S. life expectancy

Why should retirees care about the life expectancies reported here if these measures don’t predict your own lifespan? Life expectancy calculations indicate the general well-being of the entire population in your area. While the living conditions in your area can influence your own lifespan and quality of life, retirees should focus on their remaining life expectancy given their age. They should also consider how the factors listed above that influence life expectancies in the population might apply to them.

You can obtain customized estimates of your remaining life expectancy at the Actuaries Longevity Illustrator. Part of your planning for retirement is understanding how long you an an individual might live, instead of relying on generalized information about larger populations you see in the media.

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IRS Dirty Dozen Campaign Warns Taxpayers To Avoid Offer In Compromise ‘Mills’



Owing taxes can be stressful. Unfortunately, the actions of some companies can make it worse. As part of its “Dirty Dozen” campaign, the IRS has renewed a warning about so-called Offer in Compromise “mills” that often mislead taxpayers into believing they can settle a tax debt for pennies on the dollar—while the companies collective excessive fees.

Dirty Dozen

The “Dirty Dozen” is an annual list of common scams taxpayers may encounter. Many of these schemes peak during tax filing season as people prepare their returns or hire someone to help with their taxes. The schemes put taxpayers and tax professionals at risk of losing money, personal information, data, and more.

(You can read about other schemes on the list this year—including aggressive ERC grabs here, phishing/smishing scams here and charitable ploys here.)

Tax Debt Resolution Schemes

“Too often, we see some unscrupulous promoters mislead taxpayers into thinking they can magically get rid of a tax debt,” said IRS Commissioner Danny Werfel.

“This is a legitimate IRS program, but there are specific requirements for people to qualify. People desperate for help can make a costly mistake if they clearly don’t qualify for the program. Before using an aggressive promoter, we encourage people to review readily available IRS resources to help resolve a tax debt on their own without facing hefty fees.”


Offers In Compromise

Legitimate is a key word. Offers in Compromise are an important program to help people who can’t pay to settle their federal tax debts. But, as the IRS notes, these “mills” can aggressively promote Offers in Compromise—OIC—in misleading ways to people who don’t meet the qualifications, frequently costing taxpayers thousands of dollars.

An OIC allows you to resolve your tax obligations for less than the total amount you owe. You generally submit an OIC because you don’t believe you owe the tax, you can’t pay the tax, or
 exceptional circumstances exist.

Because of the nature of the OIC—and the dollars involved—the process can be time-consuming. It can also be confusing for taxpayers who may not have a complete grasp on their finances.

First, you must complete a detailed application, Form 656, Offer in Compromise. You must also submit Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-B, Collection Information Statement for Businesses, with supporting documentation (generally, bank and brokerage statements and proof of expenses).

You’ll also need to submit a non-refundable fee of $205 and payment made in good faith. The payment is typically 20% of the offer amount for a lump sum cash offer or the first month’s payment for those made over time. Generally, initial payments will not be returned but will be applied to your tax debt if your offer is not accepted. Payments and fees may be waived if the OIC is submitted based solely on the premise that you do not owe the tax or if your total monthly income falls at or below income levels based on the Department of Health and Human Services (DHSS) poverty guidelines.

The IRS will examine your application and decide whether to accept it based on many things, including the total amount due and the time remaining to collect under the statute of limitations. The IRS will also review your income—including future earnings and accounts receivables—and your reasonable expenses, as determined by their formula. The IRS will also consider the amount of equity you have in assets that you own—this would include real property, personal property (like automobiles), and bank accounts.


Before your offer can be considered, you must be compliant. That means you must have filed all your tax returns and paid off any liabilities not subject to the OIC. After you submit your offer, you must continue to timely file your tax returns, and pay all required tax, including estimated tax payments. If you don’t, the IRS will return your offer.

Additionally, you cannot currently be in an open bankruptcy proceeding, and you must resolve any open audit or outstanding innocent spouse claim issues before you submit an offer.


You can probably tell—it’s a lot to consider. You may want representation. A tax professional can help marshal you through the process and offer practical guidance, while communicating what fees could look like.

By contrast, according to the IRS, an OIC “mill” will usually make outlandish claims, frequently in radio and TV ads, about how they can settle a person’s tax debt for cheap. Also telling: the fees tend to be significant in exchange for very little work.

Those mills also knowingly advise indebted taxpayers to file an OIC application even though the promoters know the person will not qualify, costing taxpayers money and time. You can check your eligibility for free using the IRS’s Offer in Compromise Pre-Qualifier tool.

“Pennies On A Dollar”

What about those promises that taxpayers can routinely settle for pennies on a dollar? Not true. Generally, the IRS will not accept an offer if they believe you can pay your tax debt in full through an installment agreement or equity in assets, including your home. That’s why the IRS tends to reject a majority of OICs that are submitted. The acceptance rate is less than 1 in 3, according to the 2021 Data Book.

The IRS will generally approve an OIC when the amount offered represents the best opportunity for the IRS to collect the debt. It’s true that there’s a formula that the IRS uses to figure out how much they think they can collect from you. But there is some wiggle room to account for special circumstances, including a loss of income or a medical condition. It’s worth noting those are the exceptions, not the rule.


While submitting an OIC may keep the IRS from calling you, it doesn’t stop all collections activities—don’t believe companies that suggest that submitting an OIC will make your tax debt disappear. Penalties and interest will continue to accrue on your outstanding tax liability. Additionally, the IRS may keep your tax refund, including interest, through the date the IRS accepts your OIC.

You may also be liened. In most cases, the IRS will file a Notice of Federal Tax Lien to protect their interests, and the lien will generally stay in place until your tax obligation is satisfied.

Be Skeptical

An OIC is a serious effort to resolve tax debt and shouldn’t be taken lightly. Be skeptical—if it sounds too good to be true, it likely is. If you’re considering an OIC, hire a competent tax professional who understands the rules and is willing to level with you about your chances of being successful—including other options. Don’t fall into a trap that can make your situation worse.

MORE FROM FORBESIRS Urges Those Hoping To Help To Beware Of Scammers Using Fake Charities

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