Is There a time limit For the IRS to Reach a Decision on An Offer in Compromise Investigation?
The IRS typically takes six to twelve months, on average, to reach a decision on an Offer in Compromise. Although it can be longer, depending on the complexity of the case, such as if an appeal is necessary, add another two months.
The IRS does not have forever, and there are ramifications if the IRS takes too long to act on an Offer investigation.
If the IRS does not act within two years and notify you of a decision, the offer is automatically deemed accepted, under Internal Revenue Code 7122(f).
So, if your Offer is coming up on the two-year mark and things are progressing very slowly, maybe think twice about contacting the Offer Examiner to move things along.
Let’s drill down on this further. The Offer is considered accepted only if the IRS does not make a decision on it within two years, after it is received. “Decision” is defined to include the IRS rejecting the Offer, returning the Offer as not processable, a withdrawal of the Offer by you, or a failure to make payments under a periodic payment OIC, while the Offer is pending. If you have had any of these issues, the Offer was defaulted and “decision” reached.
Note: The time period in appeals for a rejected offer is not counted towards the two-year time limit.
Should you get help?
I have seen many people try to prepare their own OIC and fail because they do not fully understand the art of dealing with the IRS. Yes, you can submit an Offer in Compromise yourself but if you are trying to considerably reduce your debt, I recommend you rethink your position.
An “accepted” OIC is not the same as a “successful” OIC.
There is more to it. Sure, the average taxpayer can fill out the forms and after spending hours reading and rereading the instructions provide the substantiation needed for an application to be accepted. How do you measure success? To me, success is measured with an approval on the LOWEST DOLLAR AMOUNT the IRS will accept.
If you feel that you may be in over your head, or just want to get a second opinion, let’s set up a short call. To avoid the back and forth emails and phone tag, I have included a link to my Calendar https://calendly.com/taxman/tax-problem-resolution-initial-consultation. Let’s set up a 30 min. phone conference to get to know each other. The phone number to call is 855-829-5877 and my extension is 203.