Posted On May 07, 2016

If your OIC offer in rejected, can you appeal?

In our previous post, we wrote about making an offer in compromise (OIC) in order to try to settle your tax debt with the IRS. If your offer is accepted, an OIC can enable you to resolve your debt with the IRS for less than the full amount you owe.

But as we noted, the IRS has a lot of discretion on whether to accept or deny OICs. If your offer is rejected, is it possible to appeal?

In this post, we will address that question.

The short answer is yes, you can appeal.

The IRS even has an online self-help tool intended to assist certain taxpayers in determining whether to do so. The tool has limits, however, as it applies only to W-2 wage earners, not to the self-employed. Given how many people rely on 1099 income, that is significant limitation.

If you get an OIC rejection letter in the mail, you have 30 days to appeal. The 30 days is measured from the date on the rejection letter.

The IRS Office of Appeals is a separate division of the IRS from the one that turned you down initially. So by requesting an appeal of your OIC rejection, you will not merely be asking the same agent who has already rejected your application to make a different decision.

Providing good documentation of your financial situation will be very important in making your appeal. More specifically, this will involve worksheets that dig into the details. This includes a table that lists your income and expenses. There will also be a table for your assets and equity.

Even if don’t reach agreement with the officer handling your appeal, there is also the possibility of entering into post-Appeals mediation.

To summarize, then, it is definitely possible to appeal the rejection of an OIC.