An offer in compromise is a settlement option offered by the Internal Revenue Service (IRS) that may allow a taxpayer to address their federal income tax liability for an amount less than the full amount owed. If you are considering making an offer in compromise, keep in mind that there is no set timeframe by when the IRS will generally approve the offer. The length of time it takes for the IRS to approve an offer in compromise varies from case to case, but in general, you can expect it to take anywhere from six to twelve months. If the IRS has not approved or rejected your offer in compromise within two years from the date when the IRS receives the offer, then the IRS is required to accept the offer.
You may surprised that it generally takes up to a year to complete the offer in compromise process. The lengthy amount of time can be caused for several different reasons:
Initial Assignment and Review. The IRS generally receives a large number of offers in compromise in a given tax year, and the IRS has a limited number of caseworkers who work on these offers. Therefore, it may take some time before the specific details of your case are assigned to a caseworker for the review process to begin.
Request for Additional Information. Once an IRS caseworker begins to review your offer in compromise, they may determine that your offer is not complete. This could be because you have not completed all the necessary application forms, you did not include the necessary fees required with the offer, you have not included documentation necessary to support your reason for requesting an offer in compromise, or they have other questions about your offer for which they need an answer.
Rejection and Appeal. If the IRS caseworker makes the decision to reject your offer in compromise (offers are usually rejected because the IRS considers the offer to be too low based on the income and other assets you disclosed as a part of the offer), you can appeal the decision. Once you complete the required forms to initiate the appeals process, your appeal likewise takes time for the IRS to consider. Alternatively, depending on the reason the IRS rejected your offer, you may choose not to appeal the rejection but rather to file a new offer in compromise
What if I need help submitting or appealing an offer in compromise?
A tax attorney can help you with your offer in compromise. An attorney will have the training and experience to know the types of situations for which the IRS generally accepts offers in compromise, as well as the support you will need to include with your offer for it to be seriously considered.
If you complete the short form below, a professional tax attorney will review your case free of charge. This review is 100% confidential and does not obligate you to anything further, so you should get this initial evaluation to help determine the appropriate next steps for your tax situation.
Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.