How to Appeal an IRS Offer in Compromise that Was Rejected

appeal an irs offer in compromise

The IRS rejected 57.14% of all Offer in Compromise (OIC) applications in 2016. Fortunately, you can appeal an IRS Offer in Compromise. For your OIC appeal to be successful, you need to understand why your request was denied. Furthermore, it is important to understand the difference between an OIC that is returned vs. rejected.

OIC Returned Vs. Rejected

The IRS rejects OIC applications for numerous reasons. Note that a rejection is different than 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 corrections. On the other hand, a rejected OIC will count as a strike against your record, but you can appeal it.

Common Reasons for an OIC Returned

  • No further information was provided to the IRS even after they sent you a 14-day letter requesting it
  • You didn’t pay the application fee
  • You filed for bankruptcy
  • Additional liabilities accrued during consideration of the OIC
  • The IRS decided your offer was frivolous or made to just delay IRS collections
  • Out of payment or filing compliance (unfiled tax returns, failed to pay estimated tax payments or have proper withholdings)
  • You recently submitted a similar offer
  • You decided to pay via the periodic payments option but you did keep up with your monthly payments

Common Reasons for Rejections

  • The offer is too low, and the IRS believes you can pay more
  • You are living above your means or you have high living expenses
  • The IRS believes you have the “full ability to pay”

The IRS offer specialist should send you a notification explaining why you received the rejection. If you didn’t receive a reason, you can request that information from the IRS.

How to Appeal an Offer in Compromise

You have 30 days from the date of the rejection letter to request an appeal. After 30 days, the IRS won’t accept your appeal.

Your rejection letter should include details on how to request an appeal. It should have the address where you need to send the appeal, and it should list required information.

For your convenience, the IRS provides an online self-help tool here. The tool asks a series of easy questions to help you figure out if you should appeal. Typically, the tool only works if you meet these qualifications:

  • Received a rejection letter for your Offer in Compromise
  • W-2 employee
  • You do not work for yourself
  • No rental properties owned

If you do not meet these qualifications, you can still file an appeal. Addiitonally, you need to use one of the following methods:

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. Furthermore, 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

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

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

How to Make a Larger Offer After a Rejection

If you don’t want to appeal your former offer, you can make a larger offer. Therefore, submit your original paperwork along with a letter stating the increased offer amount.

If you are looking for a tax professional to help, feel free to call 1-888-349-2116 for a free consultation.