IRS Defaulted My Offer in Compromise Due to a Failure to Make the Offer Payments; Why?
Rejected OIC- Default on a previously accepted Offer
This came in via chat regarding a gentleman who said he had a Deferred Offer in Compromise accepted and then was not able to keep up the payments. I asked three questions. 1) Was he able to make a smaller payment? 2) Did he contact the Offer Unit to explain his situation, and 3) How long has it been since his last payment? To the first question he answered that he could make about 75% of the payments. To the second question, he said he had not yet contacted the offer unit and to the third question he said it had been two months. I told him to IMMEDIATELY hang up the phone and call the Offer Unit asking if he could stretch out the remaining payments. He called back and said he really appreciated the advice. Moral of the story ALWAYS stay in contact with the Offer Unit. I said this could have easily gone the opposite direction and he would be starting over.
The following are the most common reasons for denial of an Offer in Compromise:
- Failure to maintain compliance by making estimated payments
- Missing information
- Failure to disclose assets
- Failure to maintain compliance due to outstanding returns
- Active Bankruptcy
- Frivolous submissions
- Failure to pay the processing fee unless below a specific income level
- Failure to maintain compliance in the 5-year look-forward period
- Failure to make the non-refundable payment with the application
- Default on a previously accepted Offer
- Do not qualify for an Offer- Considered Full Pay
- Living expenses are considered excessive
- Dissipation of assets
This is item 10, Default on a previously accepted Offer
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.