Does the IRS Have All the Time They Need to Process an Offer in Compromise? No! After Two Years, It’s Automatically Accepted.
The IRS has never been known for their speed in processing Offers in Compromise. Janette asked on our chat is, does the IRS have all the time they need to process an Offer in Compromise. No, the IRS has a limited amount of time to completely process an Offer.
So, what if the IRS takes its time on your Offer, or it slips through the cracks unattended without an answer? Time can be your friend here. Usually, the IRS makes a decision on an Offer within nine months to one year. If time is ticking away with no answer, and you are closing in on the two-year mark, staying silent could be a valuable strategy.
If the IRS does not make an initial decision on your Offer within two years, the amount you offered is automatically accepted. Internal Revenue Code Section 7122(f) governs the Offer “snooze and lose” rule.
The IRS is considered to have made a decision on your Offer if you receive an initial rejection, it is returned as non-processable, you withdraw it or if you do not make upfront payments while it is pending. The time the IRS considers your appeal of a rejected compromise is not part of the two-year period as the rejection qualifies as the decision for purposes of the statute.
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.