Why Does the Offer in Compromise Take So Long?
When you file an Offer in Compromise, you wonder why it takes so long for the whole process to be completed. You think to yourself, gosh, I submitted this Offer like six months ago and I still haven’t heard anything. As you will find, when dealing with the IRS it all takes time.
Submission – Once your Offer is complete and mailed to the IRS (hopefully with tracking) it first goes to an Offer Reviewer. This Agent is the first in line to do a general overview of your Offer. Is your Offer complete, meaning all the spaces filled in? Did you send in your application payment and 20% down payment? Are all your returns filed? Are you up to date on your Estimated Tax Payments? If the answer is No to any of these questions, this Agent will return to our Offer via mail and inform you why it was not accepted for processing. In some cases, this first process can take up to six months as Offers are served in a first in, first out basis.
Queued for Assignment – Once the Offer has been determined to be acceptable for processing, it is queued for assignment to an Offer Examiner. How long it will stay in this status is determined by the availability of the Offer Examiners. As an offer is completed the Offer Examiner is assigned a new case. This period of time is dependent upon the average time to close offer cases. For an Offer Examiner to be assigned, could take another three to six months as again, first in, first out.
Processing – Once your Offer is assigned for processing, the Offer Reviewer will then forward your Offer to an Offer Examiner for review. This Offer Examiner is assigned to your Offer for a more in-depth look at your Offer and will, ultimately, be the Agent to accept or reject your Offer. The Offer Examiner will review all documents submitted with your Offer and to ensure all your income, expenses, investments, etc. are supported. Once their analysis is complete, they will contact you to discuss your Offer and ask if there is any other information you wish to add or dispute. Typically, you have a week or so to provide the additional information. Once that review is complete, they will contact you to inform if they are accepting, increasing, or rejecting your Offer. They will issue their determination in writing with a calculation table showing how and why that is their decision. If your Offer is rejected, you will have 30 days to request an Appeal. Always request an Appeal!
Complete – If you go through Appeals, the Offer Examiner will give you 30 days to respond. Once your timely response is received, they will forward your Offer to Appeals for assignment to a Settlement Officer. Again, first in first out. From there, you work with Appeals. If your Offer is accepted, you must ensure compliance over the next five years. At this point, your Offer will be assigned to a Tax Examiner who will monitor your case to ensure compliance is met. If not, you will receive a notice to rectify the issue immediately or your Offer will default.
Time – As you can see, filing an Offer takes a lot of time as there are many people involved in researching your case. An Offer in Compromise is there to assist those who truly are in need of a compromise to their tax obligations. Some people will try to cheat the system, unfortunately. This is why the IRS has so many people in place to review your Offer; to ensure there was not a failure to disclose assets, what does your tax return say about you that you neglected to mention in your Offer, was there a dissipation of assets, or are you even eligible to submit an Offer. In the end, expect an Offer in Compromise to be under review for at least one year, could be as long as two.
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.