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Offer in Compromise | Why IRS Settlement Is Rejected | Flat Fee Tax Service | San Diego

Updated: Jun 15

Offer in Compromise - IRS Settlement -

The Offer in Compromise (OIC) is an excellent program for potentially eliminating tens of thousands of dollars in tax debt, but first, your IRS settlement must be accepted by the IRS. Taxpayers may have seen advertisements (late night cable) promising that their tax debt can be settled for pennies on the dollar with an Offer in Compromise, but not everyone is eligible for a tax settlement, and those that are eligible must follow the program’s guidelines carefully. For some taxpayers, an Offer in Compromise (OIC) will only be accepted after negotiations and possibly appealing a tax settlement rejection.


THE IRS, ON AVERAGE, RECEIVE 80,000 OFFER IN COMPROMISE SUBMISSIONS PER YEAR. THE IRS WILL APPROVE, ON AVERAGE, 42% OF THE SETTLEMENT SUBMISSIONS.

Determining Your Collection Potential

The IRS will accept an Offer in Compromise (OIC) when it determines that the settlement offer is the most that they can reasonably expect to collect from you based on your financial information. If you receive a rejection letter from an offer specialist (IRS Examiner), it will often be because the IRS believes that your offer does not represent the most that they can get from you. FLAT FEE TAX SERVICE (FLAT FEE TAX RELIEF) HAS A 96% OFFER IN COMPROMISE SUCCESS RATE.


The offer specialist will make this determination based on your collection information statement. You are given statutory allowances for certain expenses, and the IRS will decide how much disposable income you have to pay off your tax debt. The IRS also considers your future earning potential. If you are living off of a fixed income that is unlikely to increase in the future, you have a stronger case for an OIC. If your income is likely to fluctuate or decrease in the future, you will have to provide evidence to the offer specialist substantiating this fact.

If you cannot make an offer that the IRS thinks is the most it can expect to collect from you, your OIC will be rejected. At this point, you should consider an installment agreement or other options.


THE NUMBER 1 REASON FOR REJECTION IS BECAUSE THE TAXPAYER DECIDED TO DO THEIR OWN TAX SETTLEMENT.

Appealing an Offer in Compromise Rejection

An Offer in Compromise will be rejected if you have failed to file any tax returns, if you have failed to provide all of the required information, or if you accumulate additional tax debt. The IRS can take quite a while to make a decision on an OIC, and any non-compliance by the taxpayer while an OIC is being reviewed will likely result in a rejection.

If you are unable to convince the offer specialist (IRS Examiner) to accept your OIC, you have the right to appeal their decision within 30 days of your rejection letter. Consult with a tax a tax professional at Flat Fee Tax Service (Flat Fee Tax Relief) if you are not sure if you have a good case to make on appeal, or you may end up wasting your time by pursuing a frivolous argument.


KNOW THIS: THE IRS WANTS TO DO 2 THINGS. ONE IS TO COLLECT MONEY, EVEN IF IT'S $100. THE IRS ALSO WANTS TO CLOSE A CASE. AN OFFER IN COMPROMISE WILL ACCOMPLISH BOTH OF THESE GOALS.


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