While most everyone is hopeful when submitting an Offer In Compromise (OIC) to settle a tax debt that it will be accepted as is, that’s not always the case. The IRS will often counter with a request to adjust the amount for which they are willing to settle. Other times, they may completely reject the OIC. If this happens, how can you successfully appeal your offer in compromise?
Do You Have Good Cause to Appeal?
Before proceeding with the appeals process, you answer several questions. First, you have to determine precisely WHAT you are appealing (besides the denial itself). For example, you may object to the counter offer the IRS made for settling the tax debt.
To know what to appeal, check the Offer in Compromise Financial Analysis Report you should have received when you learned your Offer in Compromise was rejected.
Ask yourself if the adjustment you seek is large enough to justify going through the tedious appeals process?
The appeals process itself lengthens the amount of time it will take to determine whether your Offer in Compromise will be accepted or denied. And it’s no sure bet that you will win your appeal.
However, if the adjustment is substantial (and, more importantly, you have an inability to pay) or if the IRS flat out rejects the OIC, then appealing the OIC may be the correct next step.
It’s also important to consider whether the reason for appealing is a legitimate one. Consider these questions when trying to determine whether to move forward with an appeal:
- Has the IRS made its decision based on an inaccurate interpretation of the law?
- Has the IRS improperly applied the law due to a misinterpretation of the facts?
- Is the IRS taking inappropriate collection action against you, or do you disagree with its decision to reject your offer?
The Clock is Ticking…
According to Treasury Regulation (Treas. Reg.) § 301.7122-1(f)(5)(i), “the taxpayer may administratively appeal a rejection of an offer to compromise to the IRS Office of Appeals (Appeals) if, within the 30-day period commencing the day after the date on the letter of rejection, the taxpayer requests such an administrative review in the manner provided by the Secretary.”
Regardless of your reason for appealing the rejected Offer In Compromise, the process may commence after receiving the OIC denial letter from the IRS. Once you get the notification in the mail, you have 30 days to submit form 13711, Request for Appeal of Offer In Compromise. Or, you have the option of writing a formal letter which includes the following items:
- Your name, address, SSN, and phone number
- A statement indicating that you would like to appeal the rejected OIC
- A copy of your rejection letter
- The tax periods (years) that the OIC covered
- An itemized list of the points that you are disputing and why
- Any additional information you would like the appeals office to take into consideration
- Supporting documents/information backing up your position on the items on which you disagree
- Citations of the law or authority that you have relied upon to take your position
- An original (not electronic) signature from yourself, stating that the information provided is true under penalty of perjury
The IRS employees who review OICs are human and do make mistakes. However, successfully Offer in Compromise Financial Analysis Report is not assured. If you have doubts about how the IRS treated your Offer In Compromise, it is important to seek legal representation quickly to determine if your OIC can be saved. Contact a reputable federal tax law firm like Delia Tax Attorneys (licensed to practice before the IRS in all 50 states under IRS Circular 230) to obtain advice on the best course of action moving forward.