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An Overview of the Offer in Compromise Appeal Process

Paying taxes to the State of Indiana or to the federal government is generally unavoidable, and owing a large amount of taxes or back taxes can be particularly difficult to overcome. Fortunately, there are options to reduce that amount, one of them being an offer in compromise (OIC). Taxpayers may attempt to settle tax debt with the Internal Revenue Service or the Indiana Department of Revenue in this way, but what happens if the OIC is rejected? Using the offer in compromise appeal process can give you another bite at the apple but only if you proceed correctly.

Starting the Offer in Compromise Appeal Process

The IRS explains how to initiate the offer in compromise appeal process. The first step is completing IRS Form 13711 or drafting your own letter that includes the same information as requested on the form. Some information may be obtained more quickly with the help of an attorney and includes:

  • Taxpayer name;
  • Taxpayer’s tax identification number;
  • Contact phone number;
  • Statement that you are appealing a rejected offer;
  • Identification of the tax year(s) in issue;
  • Identification of the relevant law;
  • List of the items disagreed items;
  • Statement of facts supporting your position or any additional information; and
  • Your signature, indicating that, under penalties of perjury, your written protest is correct and complete

An exempt organization or a business operating in some type of corporate or limited liability company must also gather additional information:

  • Collection Information Statement for Business (Form 433-B) and its supporting documentation
  • The documentation that came with the OIC rejection letter (Income/Expense Table and Asset/Equity Table)
  • Publication 5059 (How to Prepare an Income Collection Statement)
  • Form 656-B (offer in compromise)

When you file your form or letter, you must also attach a copy of the letter from the IRS that rejected your offer.

Qualifying for an Offer in Compromise

Tax debt is common. Even though the IRS offers multiple articles and forms about settling tax debt, offers in compromise are routinely rejected. Taxpayers who wish to initiate the offer in compromise appeal process should ensure they qualify for this type of settlement. To qualify for an offer in compromise, one of three situations must be present:

  • Taxes have been incorrectly charged to the taxpayer.
  • The IRS is doubtful it will be able to collect the debt without too much cost.
  • Paying the debt will cause an inequitable or unfair hardship.

It is difficult to qualify for settlement through an offer in compromise. It is also difficult to overcome IRS rejection of an OIC. Engaging a qualified tax attorney before making an offer in compromise can, in some cases, help you avoid a wrongful rejection in the first place, and, if your offer has been rejected, can help you understand why the offer was rejected and the likelihood that your appeal will be successful.

Why Use an Attorney for Rejected Offers in Compromise

The deadline for appealing the rection of an offer in compromise is 30 days from the date on your OIC rejection letter. With such a short window, engaging the services of an experienced tax lawyer can be critical. Your attorney can evaluate your qualification for an OIC, help gather the necessary documentation for your appeal, complete the correct forms for the appeal, and, in some cases, even negotiate with the IRS administrator who denied the original offer in compromise. Sometimes, it is just a matter of figuring out the right dollar amount that will be satisfactory to the IRS.

Given the short window appealing the rejection of an offer in compromise, It is important for a taxpayer who wishes to appeal to initiate the process quickly and in the right way. Using the skills of an experienced tax attorney can help ensure that you have done everything you can—and have gone about it the right way—to settle your tax debt.

Tax Attorney Julie Camden Can Help with the Offer in Compromise Appeal Process

Tax law is complex. For help settling tax debt through an offer in compromise or appealing the rejection of an OIC, you need help from a tax professional with experience in these areas. Attorney Julie Camden at Camden & Meridew P.C. is an Indiana tax lawyer who closely monitors changes in federal and Indiana tax law and procedure and regularly helps clients prepare and negotiate and OIC or navigate the offer in compromise appeal process. To learn how Julie can help you, schedule a consultation by calling 317-770-0000 or by using the firm’s online contact form.

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