Thursday, May 7, 2015

Appealing an Offer-in-Compromise Rejection

Don’t treat a letter of rejection for an offer-in-compromise (OIC) as the end of your world. Like any lower-court verdict, you can appeal the rejection with the help of your trusted attorney. Remember that the IRS can grant you an OIC on one of three reasonable grounds:

·         The IRS can’t determine the exact amount you owe.
·         Your income and assets aren’t enough to pay the exact amount.
·         Paying the exact amount will lead to economic hardship.

Of all the OIC requests the IRS receives, it’s estimated that only a quarter are granted. You need to increase your odds of OIC approval by making sure your economic situation fits at least one of the three aforementioned grounds. Before you start writing the IRS a letter though, you must confirm the following as well:

·         You received the rejection letter.
·         You’re a W-2 employee (working for an employer).
·         You don’t own any rental property.
·         You’re not operating an independent business.

There are two ways to appeal an OIC rejection. First is completing Form 13711, the Request for Appeal of Offer in Compromise, and Form 2848, Power of Attorney and Declaration. The latter means you plan on having someone represent you in your appeal, specifically your professional tax attorney. Send the documents to the address stated in the rejection letter. As long as you have a knowledgeable attorney at your side, your chances of approval are higher as you avoid errors in processing your OIC documents and settlements.

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