Processing times vary, but you can expect the IRS to take at least six months to decide whether to accept or reject your Offer in Compromise (OIC). The process can take much longer if you have to dispute the examiner’s findings or appeal their decision.
Threshold Requirements
The IRS won’t even consider offers that don’t meet the threshold requirements, which include:
- You must have filed all required tax returns for all tax years.
- You can’t have an open bankruptcy case.
- You must submit the required application fee.
- You must submit an initial payment. If you choose the periodic payment option, you need to keep making monthly payments while the IRS evaluates your offer.
If you don’t meet any of the threshold requirements, the IRS will return your offer without considering it. It generally takes a month or so for the IRS to complete this phase.
OIC Examiner
Your offer will then be assigned to an OIC examiner. You should receive a letter with the OIC examiner’s contact information that lets you know your case is moving forward.
The next phase is the longest and most complex part of the OIC process.
Reasonable Collection Potential and Examination
The examination will now be conducted. This requires the examiner to verify everything that was in your OIC application. If your OIC is being submitted due to doubt as to collectability, the examiner will need to determine your reasonable collection potential (RCP).
The length of this phase can depend on your financial situation. If you have few assets and only one income source, it may be easier for the OIC examiner to complete this step quickly.
If you own a business or have a lot of assets and income sources, the OIC examiner will have more work to do. Expect this phase to take at least a couple of months, but possibly much longer.
If your offer is rejected, you have the right to appeal this decision, which would prolong the process even further.
Many factors can impact how long your OIC will take to process, some of which are out of your control. However, you can submit an OIC application that contains full and accurate information, which makes it easier for the IRS to process your offer.
Consult a tax resolution attorney for a case evaluation and get assistance submitting your IRS Offer in Compromise.
The Gartzman Law Firm offers tax settlement help for both federal and state tax debt, including Offers in Compromise. Use our contact form to request a consultation with an Atlanta tax resolution attorney.