Insider Tips for IRS Offer in Compromise Approval

Are you frustrated with the low acceptance rates for IRS Offer in Compromise (OIC) applications? You’re not alone. Many tax professionals hesitate to file an OIC because the acceptance rate hovers around only 36%. This figure has remained steady for years, fluctuating only slightly.

Here’s the thing: dealing with the IRS can be daunting, especially when you’re trying to settle your tax debt for less than you owe. The key is to present your case in the best possible light and avoid common pitfalls that lead to rejection.

Enrolled agent and tax resolution specialist, Josh, is here to help you understand the OIC program of the Internal Revenue Service (IRS) better and show you how to significantly improve your chances of getting your application approved by the IRS.

Let’s dive into how you can navigate the process effectively and increase your odds of success with Offer in compromise tips coming straight from an enrolled agent. But, before that, let’s understand what an IRS OIC is.

What is an Offer in Compromise?

An Offer in Compromise (OIC) is a program offered by the IRS that allows taxpayers to settle their tax debt for less than the full amount they owe. It’s a way for individuals or businesses facing significant financial hardship to get relief from their tax liabilities. Here’s a breakdown of what you need to know about an OIC:

Key Points to Note in Application Process:

  • Form 656: You need to submit Form 656, Offer in Compromise, along with a detailed financial disclosure using Form 433-A (for individuals) or Form 433-B (for businesses).
  • Application Fee: A non-refundable application fee must be paid unless you qualify for the low-income certification.

Understanding the Eligibility of IRS OIC

Before applying for an Offer in Compromise, you need to understand the criteria it taks to be eligible. So, let’s have a look:

Who is Eligible?

Confirm your eligibility and prepare a preliminary proposal with the Offer in Compromise Pre-Qualifier Tool. You are eligible to apply for tax debt relief through an Offer in Compromise if you meet the following criteria:

  • You have filed all required tax returns and made all necessary estimated payments.
  • You are not currently in an open bankruptcy proceeding.
  • You have a valid extension for the current year’s return (if applying for the current year).
  • If you are an employer, you have made tax deposits for the current and past two quarters before applying.

If You Apply and Are Not Eligible

If you apply for an offer in compromise and the IRS cannot process your offer, then they will:

  • Return your application and offer application fee.
  • Apply any offer payment you included to your balance due.

Insider Tips for IRS Offer in Compromise Approval

At Best Tax Pro, we have a team of former IRS Revenue agents and officers who not only worked for the IRS but also trained others on processing Offer in Compromise (OIC) applications. Here are a few insider tips to help you:

Fill in Your Forms Flawlessly

The OIC application is a legal contract, so it’s crucial to ensure that what you submit is accurate and complete. Any mistakes can hinder your chances of acceptance. Double-check all the details before submission to avoid unnecessary delays or rejections.

Ensure Your Tax Returns Are Up to Date

Make sure all your personal tax returns are filed. If you’re self-employed or own a small business, ensure your quarterly estimated payments are current. The IRS wants to see that you’re taking your current obligations seriously before addressing your past tax debt. Being current on your taxes demonstrates your commitment to compliance.

Understand the IRS National Standards Program

The IRS National Standards program dictates the amounts of income and expenses you can claim based on your geographic location and tax residence. Ensure your application meets these standards before submission. This involves accurately reporting your living expenses within the acceptable limits set by the IRS. Familiarize yourself with these standards to avoid discrepancies that could lead to rejection.

Include Detailed Financial Information

Provide a thorough and honest account of your financial situation. This includes listing all assets, liabilities, income, and expenses. The IRS will scrutinize your financial condition to determine your ability to pay. Being transparent and detailed can enhance your credibility and increase your chances of approval.

Demonstrate Financial Hardship

Clearly explain your financial hardship and why paying your full tax debt would be an undue burden. Use supporting documents, such as medical bills or proof of unemployment, to substantiate your claims. Your case will be stronger if it is backed up by solid evidence and a gripping story.

Get the Right Help

Consider consulting a tax resolution specialist or an enrolled agent experienced in OIC applications. Professional guidance can help you navigate the process and avoid common pitfalls. At Best Tax Pro, our experts can provide personalized advice and support tailored to your unique situation.

Why this Matters?

Submitting an Offer in Compromise to the IRS can be a challenging process, but with the right approach and insider OIC Tips, you can improve your chances of success. You will be more equipped to make a strong case to the IRS if you follow these insider tips. Remember, the key is to be thorough, honest, and proactive in managing your tax obligations.

Maximizing Your Chances of Success

The IRS OIC is a great way to get a fresh start and manage your tax debt. By following these insider tips, you can increase your chances of success:

  • Be honest and transparent
  • Be prepared to negotiate
  • Be patient

Honesty and Transparency

Be honest and transparent with the IRS about your financial situation. This honesty will help build trust and make your case more compelling.

Preparedness to Negotiate

The IRS may not accept your initial offer. Be willing to compromise and negotiate to reach a mutually acceptable solution.

Patience is Key

The OIC process can take several months. Be prepared to wait and remain patient throughout the process.

What to do When You Receive an IRS Certified Letter?

Receiving a certified letter from the IRS can be intimidating, but it’s important to stay calm and take prompt, appropriate actions. Here are the steps you should follow:

1. Read the Letter Carefully

  • Understand the Contents: Take your time to read through the entire letter to understand why the IRS contacted you. The letter will detail the issue and any actions you need to take.
  • Note Deadlines: Pay close attention to any deadlines mentioned. Missing these deadlines can lead to additional penalties and interest. It’s best to be aware.

2. Verify the Information

  • Check for Accuracy: Ensure that the information in the letter pertains to you. Mistakes can happen, so verify that the details and the tax issues mentioned are correct.
  • Compare with Your Records: Compare the information with your tax records to see if there’s any discrepancy.

3. Respond Promptly

  • Follow Instructions: The letter will typically outline specific steps you need to take. Follow these instructions carefully.
  • Contact the IRS if Needed: If the letter requires you to respond, do so promptly. You can also call the IRS if you need further clarification or assistance.

4. Gather Necessary Documents

  • Collect Relevant Paperwork: Gather all relevant documents that pertain to the issue raised in the letter. This may include tax returns, receipts, and any other supporting documentation.
  • Organize Your Records: Keep everything organized to make your response process smoother.

5. Keep Copies

  • Document Everything: Make copies of the letter and any correspondence you send to the IRS. Keeping detailed records is paramount in case of future disputes.

6. Follow Up

  • Track Your Response: Ensure your response reaches the IRS by the deadline. Use certified mail or another tracking method to confirm delivery.
  • Monitor the Situation: Keep an eye on any further communications from the IRS and respond as needed.

Bottom Line

Increasing your chances of having an IRS Offer in Compromise accepted involves careful preparation, detailed financial documentation, and a clear understanding of IRS requirements. By ensuring you meet all eligibility criteria, accurately presenting your financial situation, and possibly negotiating payment options, you can significantly improve your prospects. Remember, the key is thoroughness and transparency.

If you are still unsure about how to increase your chances, our Professional Tax Consultant team is here to help. With over 130 years of cumulative experience and former IRS agents on staff, we have the expertise and insider knowledge to guide you through the process and secure the best possible outcome for your financial future. Let us assist you in achieving tax debt relief and resolving your tax issues effectively.

Have more IRS tax problems? Is the IRS crippling your life? Get additional services, such as, tax audit help and unfiled tax returns help. Get out of the mess and start living a life without stress because with Best Tax Pro, it is possible.


Mr. Joshua A. Webskowski

Joshua specializes in successfully resolving cases in all areas of tax resolution including liens, levies, & other IRS collections cases.

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