Appeal Your Rejected Offer in Compromise (OIC)

An Offer in Compromise or OIC can significantly reduce the effect of tax burdens on taxpayers. However, the IRS puts each OIC into consideration individually and it is capable of turning down offers for different reasons. Instead of accepting the rejection as the IRS’ final determination, you can use some strategy to appeal the denial of your Offer in Compromise.

Reasons for Denial

The IRS can reject your OIC for any number of reasons. The most common factors that contribute to a refusal include:

• The offer amount is too low or below the Reasonable Collection Potential, or RCP
• Failure to make proper financial documentation like receipts, bank records, etc available
• Conviction of a serious crime
• Failure to include the application fee with your OIC
• Living above the IRS Allowable Living Expenses limit
• The IRS believes you have the “full ability to pay”

By law, the IRS must bring the reason it has turned down your OIC to your notice. You will be informed by letter; the letter will contain instructions and guidelines for appealing the decision.
Your appeal must be filed within 30 days of receiving the OIC rejection letter. If you wait longer than 30 days, the IRS will turn deaf ears your appeal and require that you apply for a new Offer in Compromise. This is something you certainly don’t want.

If you are still uncertain of whether or not you can or should appeal the OIC rejection, you can find out for sure by using the OIC appeals resource found on the IRS website. According to this tool, you must meet the following requirements before you can file an appeal:

• Receiving an OIC rejection letter from the IRS
• Being a W-2 employee
• Not possessing any rental properties
• Not working for yourself

If you meet these and other criteria outlined on the IRS website resource or your rejection letter, you can go ahead with appealing the decision of your OIC denial.

How to Appeal an IRS Offer in Compromise that Was Rejected | Los Angeles, CA

In the Year 2018, the IRS rejected 59.32% of all Offers in Compromise. Fortunately, you can appeal an IRS Offer in Compromise. For your OIC appeal to be successful, make investigations on why your request was rejected. Furthermore, it is vital to understand the difference between an OIC that is returned vs. rejected.

OIC Returned Vs. Rejected

The IRS rejects OIC applications for several reasons. Note that rejection is different from an OIC that is returned.  Consequently, a taxpayer cannot appeal an OIC that is returned. However, a taxpayer can resubmit an OIC that was returned after making necessary adjustments. On the other hand, a rejected OIC will count as a strike against your record, but you can appeal it.

Before appealing the IRS’ decision to reject your OIC, you should first ensure that you can present a practicable argument and support your case with evidences. It is advisable that you be prepared to defend your argument that the IRS misinterpreted the facts of your case or the law as it applies to your OIC.

You should also be ready to explain why the action being taken against you by the IRS is improper. For instance, you could argue that you do not legitimately owe the debt or that the amount that you must pay is wrong.

Regardless of the argument you intend to make, you must support your claims with verifiable and legitimate documentation. You should have ready paperwork like bank records, tax returns, receipts, and other proof ready to support your appeal.

Writing the OIC Rejection Appeals Letter

After you ensure that you have the correct documentation and proof to back up your case, you may then continue with writing your appeals letter. The IRS requires that your letter contain particular information. Without this information, your letter may be rejected and returned to you.

The details that must be included in your appeals letter are:

• Your full name, address, and daytime phone number
• A statement that you want to appeal the findings of your case to the Office of Appeals
• A copy of the letter that you received that shows the proposed changes to your case
• The tax year and/or period for your OIC
• Facts to hold up your argument
• The law or authority that supports your argument
• The Penalties of Perjury statement, which can be found on IRS.gov or your OIC rejection letter
• Your signature under the Penalties of Perjury statement

You also should clearly state the reasons that you do not agree with the IRS’ rejection of your Offer in Compromise. Your inability to pay what you owe is not a valid reason to appeal the OIC rejection.

Method 1 to Appeal an IRS Offer in Compromise:

• Complete Form 13711 (Request for Appeal of Offer in Compromise)
• If a tax professional is signing your form, complete Form 2848 (Power of Attorney and Declaration)
• Send these forms to the address provided in your rejection letter

Method 2 to Appeal an IRS Offer in Compromise:

If you don’t want to fill out Form 13711, you can send a letter to the IRS. Also state your intent to appeal and include the following information:

• Contact information (name, address, phone number)
• Social Security Number
• Copy of the rejection letter from the IRS
• List of the tax years related to the tax debt
• The reasons you don’t agree with the rejection
• Documents or facts that support your disagreement

Affirm to all information under “penalties of perjury” and sign the letter. Then, send it to the address on your rejection letter.

If you have questions, get in touch with a tax professional. Otherwise, call the contact number on your rejection letter or get in touch with the IRS directly.

However, you may state other reasons like not agreeing with the amount that you owe or having special situations that affect your finances like:

• Being disabled and not able to work or earn an income
• Suffering from a long-term or fatal illness
• Living on a fixed income like Social Security
• Being retired and having a source of income from an IRA or pension

Presenting proves of your case can be challenging and overwhelming. Rather than risk another rejection from the IRS, you may fare better with your appeal by permitting a tax professional to help with your case. A tax professional will know what information to include in your letter and also tell you what paperwork and evidence you need to support your case.

You have the right to appeal the rejection of your Offer in Compromise. You can oblige the IRS to reconsider your case by bearing these important facts about the OIC appeals process in mind.