US Federal Tax Services - Offer in Compromise Timing
STEP 1- Submit your Offer in Compromise and get it marked as “Processable” which is determined by the following factors;
- taxpayer is not a debtor in an open bankruptcy proceeding;
- taxpayer is not submitting this Offer in Compromise merely to delay the IRS enforced collections;
- taxpayer has submitted the $150 application fee, or Form 656-A, Income Certification for Offer in Compromise Application Fee and Payment; and
- taxpayer has either submitted 20 percent payment with the lump sum offer, or a signed Form 656-A, Income Certification for Offer in Compromise Application Fee and Payment; or has Submitted the first installment payment on a short term or deferred periodic payment offer, or a signed Form 656-A, Income Certification for Offer in Compromise Application Fee and Payment.
It takes about 3-6 weeks for the IRS to confirm that an Offer in Compromise is, in fact, “Processable.”
NOTE: If you offer 20% Offer in Compromise lump sum, the IRS may keep that amount even if they reject your Offer. It is therefore essential that an Offer in Compromise is completely accurate, competitive, and is likely to be accepted based upon your facts and circumstances.
Step 2 - Assignment of the matter to an IRS Offer in Compromise Examiner.
These examiners are located in field offices across the country. It takes about a 4-6 weeks to receive a letter from the Offer in Compromise Examiner. This letter will simply provides their contact information.
Step 3 - Your Offer in Compromise Examiner will then go through all of the information that the taxpayer has submitted with the Offer in Compromise seeking to determine what the Reasonable Collection Potential ("RCP") is over the remaining collection period.
This step can take 4 weeks to 8 months, depending on the complexity of the taxpayer's case.
STEP 4- The Offer in Compromise Examiner will either accept the proposed Offer in Compromise or reject it. If rejected, a taxpayer may now be able to rebut the Examiner's basis for objection or increase the amount of the offer. It is very important that the taxpayer argue specific issues and provide supporting documentation that sheds light on the Reasonable Collection Potential.
If the Offer in Compromise is accepted at this point, the entire process took about 6-8 months. If the taxpayer rebuts the Examiner's rejection and then the Offer in Compromise is accepted, the process will take about 8-12 months.
STEP 5 - If the Offer in Compromise is rejected, the taxpayer may appeal the rejection to the IRS Office of Appeals.
An appeal of a rejection of a taxpayer's Offer in Compromise can take 14 to 24 months.
NOTE: All times are according to our own experience. Your experience may vary.
An Offer in Compromise is generally only accepted when the taxpayer offers the IRS an amount you what they would be able to receive from the taxpayer through enforced collections.
Offer in Compromise appeals officers are more likely to accept a previously rejected Offer in Compromise when they are given very concrete, very reasonable, well document reasons that shed a light on the true nature of your Reasonable Collection Potential.