An Offer in Compromise (OIC) is an agreement with the IRS that allows taxpayers to settle their tax debts for less than the full amount owed. However, not all offers are accepted. If the IRS rejects your OIC, it’s essential to know why it was denied and what you can do next.

At Tax Law Advocates, we specialize in helping taxpayers navigate complex IRS issues, including rejected Offers in Compromise. Here’s what you need to know.

Understanding Why the IRS Rejected Your Offer in Compromise

When the IRS rejects your OIC, they will send you a rejection letter explaining the reasons for their decision. According to the IRS, common reasons for rejection include:

  • Insufficient Offer Amount: The IRS determined that you have the ability to pay more than you offered.
  • Incomplete or Inaccurate Financial Information: Missing or incorrect details on your financial forms (Form 433-A (OIC) for individuals or Form 433-B (OIC) for businesses).
  • Failure to Comply with Filing Requirements: You must have filed all required tax returns and made estimated tax payments for the current year.
  • Inadequate Evidence of Financial Hardship: If you claimed special circumstances but failed to provide sufficient evidence, the IRS may deny your offer.
  • Misrepresentation of Financial Information: Any false or misleading information can lead to rejection.

Source: IRS Offer in Compromise FAQs

Reviewing Your Rejection Letter

Your IRS rejection letter will include:

  • The specific reason your OIC was denied.
  • A detailed breakdown of the IRS’s financial analysis.
  • Instructions on how to file an appeal if you disagree with the decision.
  • A deadline for filing an appeal (typically 30 days).

It’s crucial to read this letter carefully. If you disagree with the IRS’s decision, you have the right to appeal. At Tax Law Advocates, we help clients review their rejection letters and identify potential grounds for appeal.

How to Appeal a Rejected Offer in Compromise

If you believe the IRS made a mistake in rejecting your OIC, you can file an appeal. To do this, you must:

  1. Submit Form 13711, Request for Appeal of Offer in Compromise.
    • This form allows you to explain why you disagree with the IRS’s decision.
    • Attach supporting documentation, such as updated financial information.
  2. Mail Your Appeal to the Address Listed in the Rejection Letter.
    • Make sure to file your appeal within the specified deadline (usually 30 days).
  3. Attend an Appeals Hearing (if requested).
    • An IRS Appeals Officer will review your case and give you an opportunity to present your arguments.

Source: IRS Appeals Process for Offer in Compromise

Strengthening Your Appeal

To increase your chances of success on appeal:

  • Review the IRS Financial Analysis: Carefully compare their calculations with your financial records. Look for any errors or discrepancies.
  • Update Your Financial Information: If your financial situation has changed since your initial submission, include updated income, expense, and asset details.
  • Provide Clear Evidence of Financial Hardship: If you cited special circumstances (like medical bills, unemployment, or disability), provide documentation to support your claims.
  • Work with a Tax Attorney: At Tax Law Advocates, we help clients prepare strong, evidence-backed appeals that address the IRS’s concerns.

Alternative Options if Your Appeal Is Denied

If your appeal is also rejected, you still have options for resolving your tax debt:

Installment Agreement

An Installment Agreement allows you to pay your tax debt over time. You can choose from various payment plans, including short-term, long-term, and partial payment options.

Currently Not Collectible (CNC) Status

If you are experiencing severe financial hardship, you may qualify for Currently Not Collectible (CNC) status, which temporarily stops IRS collection actions.

Penalty Abatement

If penalties make up a significant portion of your tax debt, you may qualify for penalty relief, such as first-time penalty abatement or reasonable cause abatement.

Bankruptcy

In some cases, tax debts may be discharged in bankruptcy, but this depends on the type of tax debt, the age of the debt, and other factors.

Reapply for an Offer in Compromise

If your financial situation changes, you can reapply for an OIC with stronger evidence or a revised offer amount.

Source: IRS Payment Options for Taxpayers

Why You Need Professional Help with an OIC Rejection

Dealing with a rejected Offer in Compromise can be stressful, but you don’t have to face it alone. At Tax Law Advocates, we provide:

  • Thorough Case Review: We help you understand why your offer was rejected and identify potential errors.
  • Strategic Appeal Preparation: Our experienced team prepares strong, evidence-backed appeals to maximize your chances of success.
  • Alternative Resolution Planning: If an appeal isn’t viable, we help you explore other tax relief options.
  • Ongoing IRS Negotiation: We communicate directly with the IRS on your behalf, protecting your rights and ensuring fair treatment.

Our attorneys have decades of experience in tax resolution, and we know how to fight for the best possible outcome.

Call Tax Law Advocates for Trusted Tax Relief Assistance

If your Offer in Compromise has been rejected, don’t give up. At Tax Law Advocates, we help taxpayers across the country resolve their tax debts—even when the IRS says no. Our experienced team can review your case, file an appeal, or help you explore other relief options.

📞 Call us today at 855-612-7777 for a confidential consultation. Let us help you protect your financial future and achieve the tax relief you deserve.