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.

Common reasons why an Offer in Compromise is rejected include :

  • The IRS deemed the Offer as being too low or unreasonable. More specifically, the amount that you offered was less than the “reasonable collection potential” (RCP) assessed by the IRS.
  • Failure to provide receipts and supporting documentation
  • You have been convicted of a serious crime
  • Failure to include an application fee with your OIC
  • You are living above the IRS Allowable Living Expenses

The IRS should explain to you on paper why your Offer in Compromise was rejected, or at least have that information available to you upon request. If the IRS fails to provide you with this information, contact a tax attorney or a qualified professional who can make this request on your behalf.

How to Appeal an Offer in Compromise

Appealing an Offer in Compromise can be straightforward. 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 that “Appeals will not accept your request for appeal.”

The IRS letter that you received should provide you with details on how to file your appeal, including where and when to send it, as well as any information that you will will need to provide.

For your convenience, the IRS provides an online self-help tool here, but only if you meet ALL of the following qualifications:

  • You received an IRS OIC rejection letter
  • You are a W-2 employee
  • You have not rental properties
  • You do not work for yourself

If you do not meet these qualifications, you can still file an appeal with the IRS Office of Appeals by following these directions:

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, you can send a letter to the IRS (using the address listed on the original rejection letter) stating your intent to appeal your Offer in Compromise rejection and including the following information:

  • Contact information (name, address, phone number and Social Security Number)
  • Copy of the letter that the IRS sent you confirming the rejection
  • Tax years this OIC encompasses
  • Details of the OIC (e.g. AET, EIT Tables or Form 433) that you don’t agree with
  • Documentation or facts that support your disagreement

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

If you don’t want to appeal your former offer, but are looking to make a larger offer, then resubmit your original OIC paperwork with a letter detailing your intentions to increase your offer amount.