Did the IRS Reject Your Offer in Compromise in Henderson, NV?
It may be possible to appeal an IRS rejection of an Offer in Compromise (OIC). The taxpayer needs to understand why his or her request was denied, which sometimes requires assistance from a tax lawyer or other tax professional. It is also important for taxpayers to know the difference between a rejected OIC and one that has simply been returned, which cannot be appealed.
Why are OICs Rejected?
In 2016, the IRS rejected 57.14 percent of all OICs submitted by taxpayers. When an OIC is rejected, the taxpayer should receive a notification giving the reason why. If a reason is not listed, the taxpayer should request that information from the IRS.
One of the most common reasons for rejection is that the offer made is too low and the IRS believes the taxpayer could afford to pay more or can pay the full amount. Another reason is that the IRS considers that the taxpayer is living beyond his means. It may be possible for the taxpayer to offer a higher payment amount and avoid filing an appeal.
Rejection vs a Returned OIC
There is a major difference between an OIC that has been rejected or one that has been returned. When an OIC is returned, it can be resubmitted after corrections are made or certain circumstances, like bankruptcy or paying via periodic payments options changed. A returned OIC does not count as a strike against the taxpayer’s record, while a rejected OIC will.
How to Appeal a Rejection
A taxpayer may appeal a rejected OIC within 30 days from the date of the rejection letter. After 30 days have passed, the IRS will not accept an appeal. The rejection letter should include instructions on how to request an appeal and where the Form 13711 “Request for Appeal of Offer in Compromise” should be sent.
The IRS provides an online tool that assists taxpayers in determining whether they should file an appeal. If the taxpayer meets the qualifications to appeal, he or she would complete Form 13711. If the taxpayer has a Henderson, NV tax lawyer file the form, he or she will also need to file a Form 2848 “Power of Attorney and Declaration.” Both forms would need to be sent to the address provided by the IRS.