IRS Denied My Third Offer in Compromise Due to a Frivolous Submissions; Why?
Rejected OIC- Frivolous submissions
I just got off the phone with a young lady who told me that her third Offer in Compromise was summarily denied in the submission phase. I asked her two questions 1) How many Offers had she submitted up to this point? 2) Were the offer submissions significantly different to the first? She kind of answered both questions with one answer. She said that some DIY firm, and I will not mention which, told her she could just keep submitting offers as a stalling tactic. This is patently incorrect that the advices should probably be considered malpractice. First, if you submit a second or subsequent offer, it MUST be significantly ‘different” than prior submissions or it will be denied summarily as “frivolous” and for the sole purpose of delaying the collection process. Second, here is where the malpractice comes in; every time you submit an Offer in Compromise, you toll (extend) the Statute of Limitations and the interest and penalties continue to accrue. I told her to get some competent help as the DIY firm was making things worse!
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 6, Frivolous submissions
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.