irs offer in compromise acceptance rate 2019The IRS released data recently on the Offer in Compromise (OIC) acceptance rate for 2019. The OIC acceptance rate decreased by 7.4% when compared to 2018. The dollar amount for all accepted OICs increased by 10.76% or about $28.1 million. That represents an average of $16, 177.86 per offer accepted.  The number of offers submitted decreased by 4,902 or 8.3% when compared to 2018. This could be due to a strong economy in 2019.

An OIC is an agreement between a taxpayer and the IRS for the taxpayer to settle their liabilities for less than they owe. However, taxpayers need to qualify as the IRS will look at their tax compliance, their assets, income, and liabilities. In other words, taxpayers need to qualify financially. Still, they also need to have their tax filings, estimated tax payments for the year, or federal tax deposits (if a business) up to date. Furthermore,  if the taxpayer can pay off their tax liabilities with a payment plan or through another method, then the taxpayer may not qualify.

The Acceptance Rate Decreased by 7.4% from FY 2018

The 2019 IRS Offer in Compromise acceptance rate dropped to 32.99% for 2019 from 40.4% in 2018. This represented a decrease in the OIC acceptance rate of 7.4%. We expect this number to rebound next year with the fact that the COVID-19 crisis caused economic problems for many businesses and individuals.

Note: The IRS’s recent People First Initiative suspended payments due under an existing OIC and provided taxpayers until July 15th, 2020, to provide documentation supporting a pending OIC.

The Average OIC Amount Accepted Per Offer Increased by 48%

The dollar amount the IRS reports every year for OICs represents what taxpayers paid the IRS to resolve or settle their tax liability. For 2019, the total dollar amount of offers accepted increased by 10.76%, or $28.1 million compared with 2018.

Moreover, the average dollar amount per accepted offer in compromise, increased by 48.16% or $5,258.64.