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How To Appeal an Offer In Compromise That Was Rejected

appeal offer in compromiseHaving your Offer In Compromise (OIC) rejected is not uncommon because only 90% of all offers are accepted by the IRS. Having a good understanding of why it was rejected will help you when you try to appeal an Offer In Compromise.

Reasons Why Your Offer Was Rejected

There are many reasons why an OIC could be rejected. This is different then it not being processed which could be due to an incomplete form, missing documentation, changing the form, for by not meeting any of the requirements.

Some of reasons why an Offer In Compromise could be rejected:

  • You made an Offer that the IRS deemed as being too low or unreasonable. More specifically, the amount you offered was less than the "reasonable collection potential" (RCP) assessed by the IRS.
  • You failed to provide receipts and supporting documentation
  • You have been convicted of a serious crime
  • You didn't include your application fee with your OIC
  • You are living above the IRS Allowable Living Expenses

The IRS should tell you on paper why your Offer In Compromise was rejected or at least have that information available to you upon request. If they fail to provide this too you, contact a tax attorney or a professional who can make this request on your behalf.

How To Appeal an Offer In Compromise

Appealing an Offer In Compromise can be straight forward. If you received your rejection letter within the last 30 days, you can file an appeal, otherwise if it has been longer than 30 days the IRS clearly states "Appeals will not accept your request for appeal."

The IRS letter you recieved should tell you how in details to file your appeal, what address and when to send it, and what information you will need to provide. For your convvenience, the IRS provides an online self-help tool here, but only if you meet the follow qualifications: you recieved an IRS OIC rejection letter, you are a w-2 employee, you have not rental properties and you don't work for yourself. If you don't meet these qualifications, you can still file an appeal to the IRS Office of Appeals, by following the directions below:

Method 1:

  • Complete Form 13711 - Request for Appeal of Offer In Compromise
  • Complete Form 2848 - Power of Attorney and Declaration if a tax professional is signing your form
  • Send the letter to the address provided in your rejection letter

Method 2:

If you don't want to fill out form 13711, then you can send a letter to the IRS (address should be on your original rejection letter) stating you want to appeal your Offer In Compromise with the following information:

  • Contact information (name, address, phone, and Social Security Number)
  • Copy of letter IRS sent you that confirms their rejection
  • Tax years this OIC encompasses
  • Details of the OIC (e.g. AET, EIT Tables, or form 433) you don't agree with
  • Documentation or Facts that support your disagreements

Sign the letter stating all information is true "under the penalties of perjury," and send it to the address the IRS told you to send it to with your rejection letter. If you have questions, you can call the number on our site, call the contact on your rejection letter (if any) or you call the IRS directly at 1-800-829-1040.

Remember, if you don't want to appeal your former offer and just want to make a bigger offer, then resubmit your original OIC paperwork with a letter detailing your intentions to increase your offer amount.