It’s disappointing to get an Offer in Compromise (OIC) rejection letter after several months of waiting, but you still have options for resolving your tax debt. You can attempt to negotiate issues with the OIC examiner, take your case to IRS Appeals, or consider other tax resolution options.
The Rejection
You should receive a rejection letter from the OIC examiner. This letter should inform what caused the rejection, which can help you decide what your next steps are.
Sometimes, offers are rejected because you didn’t fill out paperwork correctly or completely. Offers can also be returned without consideration, in which case you have the option of fixing the error and resubmitting your OIC. However, you may have to pay another application fee.
The most common substantive reason OICs are rejected is that your reasonable collection potential (RCP) exceeded your offer amount.
Levels of Appeals
If you disagree with the figures used by the OIC examiner, such as the value of your equity in certain assets, you can try to negotiate with them once again. Keep in mind that you only have 30 days from the date on the rejection letter to file your official appeal, so make sure you move quickly.
If you haven’t made any progress and your appeals deadline is approaching, you will have to file your official appeal. IRS Appeals is a separate division and may view your case from a different perspective.
However, your Appeals Officer is also generally going to defer to the finding of the OIC examiner that has already spent several months working on your case. Make sure you have a legitimate dispute and supporting documentation to show why your arguments are valid.
Other Options
You have other options if your OIC is rejected, including withdrawing your offer or exploring your other tax resolution options.
Installment agreements are a viable option for most taxpayers. In some cases, you may qualify for a partial payment installment agreement that includes some tax debt forgiveness.
Even if you have to pay back your tax debt in full, you can negotiate terms that work within your budget. You should also make sure you’ve considered other tax relief strategies, such as innocent spouse relief or penalty abatement.
Consult a tax attorney to get help deciding whether to appeal your Offer in Compromise rejection or pursue another tax resolution program.
The Gartzman Law Firm can help you appeal an Offer in Compromise rejection or find another solution to your tax problems. Use our contact form to request a consultation with an Atlanta tax resolution attorney.