Turn Rejection into Approval: Appeal Your Offer in Compromise Decision

Receiving a rejection from the IRS on your Offer in Compromise (OIC) can be disheartening, especially when you’re relying on it to ease your financial burdens. But the good news is, that a denial doesn’t mean you’re out of options. 

The IRS provides an opportunity to appeal their decision, allowing you to present your case again with stronger evidence or corrected documentation. Instead of accepting the rejection, it’s time to turn things around and take action. 

Read on as we walk you through the essential steps to appeal an OIC decision and increase your chances of securing the tax relief you deserve.

Why Offers in Compromise Get Rejected

Before diving into the appeal process, it’s important to understand why your Offer in Compromise (OIC) may have been rejected. 

Understanding the specific reason behind your rejection is the first step in building a strong appeal. Once you identify where things went wrong, you can take targeted action to address those issues and improve your chances in the next round.

Common reasons for rejection include:

• Financial Miscalculations: If the IRS believes that you can afford to pay more than what you offered, based on your income, assets, and ability to pay, they’ll likely reject your OIC. The financial information you submit must align with IRS expectations.

• Incomplete or Missing Documentation: A rejection can occur if your OIC package is missing crucial supporting documents, such as proof of income, asset valuations, or other financial statements. These documents are critical for the IRS to accurately assess your ability to pay.

• Disagreement with the Proposed Settlement: In some cases, the IRS might simply disagree with the amount you’ve proposed to settle your tax debt. They might believe you haven’t offered a reasonable amount based on your financial circumstances.

When to Appeal Your Offer in Compromise

While it’s discouraging to receive a rejection, there are specific situations where appealing your OIC is not only possible but highly advisable. Understanding when to file an appeal can significantly increase your chances of success. 

Here are key scenarios when an appeal makes sense:

Errors in the IRS Evaluation

Mistakes happen, even with the IRS. If you believe there was an error in their calculation of your income, assets, or ability to pay, an appeal is a way to correct these inaccuracies. 

For example, if the IRS overlooked certain expenses or misjudged your financial situation, you may have strong grounds for appeal.

Changes in Financial Circumstances

If your financial situation has worsened since your OIC was initially submitted, such as losing a job or facing unexpected medical expenses, an appeal gives you the chance to present this updated information. These changes can potentially shift the IRS’s evaluation in your favor.

New Evidence or Documentation

Sometimes, after your OIC is rejected, you may find additional documents or evidence that better support your case. This could include more accurate financial records, valuations, or legal documents that weren’t part of your original submission.

It’s crucial to act quickly once your OIC has been rejected. The IRS allows a 30-day window to file an appeal, so understanding your reasons for challenging the decision and preparing the necessary documents is essential to ensure your appeal is taken seriously.

How to Appeal an Offer in Compromise Rejection

Step 1: File Form 13711

The first step in appealing your OIC rejection is to complete and submit Form 13711. This form is specifically designed for taxpayers who wish to appeal their rejected OIC. 

Ensure that all sections of the form are filled out accurately, and include the reasons why you believe the IRS decision should be reconsidered. Be as specific as possible in your explanations to avoid any confusion.

Step 2: Gather and Organize Supporting Documents

Strong supporting documentation is essential for a successful appeal. You will need to provide detailed financial information, including:

• Updated proof of income and expenses.

• Any new evidence of financial hardship (e.g., medical bills, unemployment documentation).

• Asset valuations and any changes in your financial status since the rejection.

Make sure all the documents are well-organized and easy to understand, as they will be the foundation of your appeal.

Step 3: Write a Convincing Appeal Letter

A well-crafted appeal letter can make a significant difference. In this letter, you should clearly explain why you believe the original OIC decision was incorrect. 

Address the reasons for the rejection, correct any errors, and provide additional context if your financial situation has changed. Be professional and direct in your tone, focusing on factual evidence that supports your case.

Step 4: Ensure Accuracy and Attention to Detail

The IRS places a high value on accuracy. Double-check all forms and documents for errors or inconsistencies before submitting your appeal. Any mistakes or missing information could lead to further delays or a denied appeal – so make sure everything is in order.

What Happens After Filing the Appeal?

Once your appeal is submitted, an IRS appeals officer—independent from the original decision—will review your case. They’ll reassess your financial situation and any new documentation you’ve provided to determine if a settlement is appropriate.

The appeal process typically takes several months, though timelines can vary. During this time, the IRS may request more information or even negotiate a revised settlement offer. If this happens, being responsive and flexible is key to reaching a favorable outcome.

Next Steps If Your Appeal Is Denied

While appealing an OIC rejection gives you another chance to settle your tax debt, there’s always the possibility that the appeal may be denied. If that happens, don’t panic—there are still alternative solutions to explore.

Consult J. David Tax Law for Professional Guidance

Your first step should be to consult with J. David Tax Law. Their experienced tax attorneys can help you evaluate why the appeal was denied and provide expert advice on your remaining options. They’ll guide you through alternative strategies to resolve your tax debt.

Reevaluate Your Financial Situation

Review your income, assets, and expenses to see if your financial circumstances have changed since the original submission. If things have worsened, you may be able to file a new OIC with a more realistic offer.

Explore Other IRS Tax Relief Programs

Even if the OIC appeal is denied, there are other IRS programs available, such as installment agreements or Currently Non-Collectible status. These alternatives can provide temporary or long-term relief while you work to resolve your tax debt.

Don’t Give Up—Take Action Now

A rejection of your offer in compromise doesn’t mean you’re out of options. The IRS provides a path to appeal, allowing you to correct mistakes, present new evidence, and make your case once more. By taking prompt action, filing a strong appeal, and working with professionals, you can significantly improve your chances of securing the tax relief you need.

Don’t let a rejection be the final word on your financial future—contact J. David Tax Law today for expert assistance and take the first step toward resolving your tax debt.