The IRS struggles every year to collect unpaid taxes. Interest and penalties accrue on all tax debts until paid and often penalties and interest can equal two or three times the original tax amount. However, the IRS and Congress soon realized that getting something was better than nothing and that it made sense to forgive tax debt if at least some portion of the tax was recovered. This resulted in the Offer in Compromise program.
The IRS has made great strides in improving the processing of OICs. These efficiencies are making it easier for taxpayers to navigate the OIC process and enable them to receive responses in a timely manner.
The rejection rate is very high. This often is the case as submitted documentation is often incomplete, the taxpayer is delinquent with tax filings or the taxpayer earns above the required financial allowance. Getting the offer in compromise help you need to be successful is of great importance.
If the IRS sends you a response, make sure that you respond promptly. You may only have a few weeks to get the final information prepared and submitted back to the IRS. Failing to timely respond is often a reason for rejection.
Upon final review, the IRS assesses the taxpayer’s collection potential. This is where many offers breakdown. The taxpayer may not have the funds currently, but they are generating income and have the ability to pay off the entire balance over time. Under these circumstances, the IRS would prefer an installment agreement rather than an offer in compromise.
But hope is not lost if you are rejected. Just make that when you solicit offer in compromise help that you get what you are paying for.
Hiring an offer in compromise attorney can help you improve the chance that your offer will get accepted. At a minimum they can review your situation and provide you valuable information that will allow you to make an informed decision.
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