Processing times vary, but you can expect it to take at least six months for the IRS to decide whether to accept or reject your compromise offer (OIC). The process can take much longer if you have to challenge the examiner's findings or appeal your decision. In most cases, the IRS will not accept an ICO unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (RCP). CPR is the IRS's way of measuring a taxpayer's ability to pay.
The RCP includes the value that can be obtained from the taxpayer's assets, such as real estate, cars, bank accounts and other assets. In addition to property, the RCP also includes anticipated future income minus certain amounts allowed for basic living expenses. It usually takes six to nine months for the IRS to respond to your offer in a commitment request. Staff, funding and the time of year when the OIC is presented influence the time needed for the decision-making process.
If more than two months have passed, you should check with the IRS to see how the process progresses. It's common for the IRS to take up to six months to make a decision. Some decisions may take longer than a year. If you owe back taxes to the IRS or have a major bill you can't pay, you have options.
The IRS isn't going anywhere, but if you work with them, they can help you resolve your tax debt. One such way to resolve back taxes is the compromise offer. The commitment offer process is a way to pay less tax debt than you owe. Wiztax's free online system guides you through the pledge offer process and provides you with helpful tips and suggestions at every step of the process.
Start by answering simple questions about taxes. Wiztax then calculates the amount of your commitment offer and completes all of the IRS OIC forms for you. Our Wiztax experts have decades of experience in tax law and the IRS, and are always available to answer tax questions, help with the pledge offer process, and review all IRS OIC forms before filing them. We know what questions to ask so that the IRS receives the most complete and accurate information needed to make a decision about your compromise offer.
You can rest easy knowing that all your questions, from the simplest to the most complex, will be answered. The refund that is withheld as part of the offer agreement applies to the total tax debt and is not considered a payment of the amount of the accepted offer. The letter will explain why the IRS rejected the offer and will provide detailed instructions on how the taxpayer can appeal the decision to the IRS Independent Appeals Office. Prior to his current position, Jim's consulting practice focused on the areas of tax controversy and tax administration, which included leading the development of tax problem software products for tax professionals, testifying before Congress, advocating for the transparency and efficiency of the IRS, and proposing innovative large scale solutions for taxpayers and tax professionals.
When the IRS terminates an OIC, the agreement is no longer in effect and the IRS can collect the amounts originally owed (minus payments made), plus interest and penalties. The best approach is to evaluate your tax situation, personal finances, and IRS collection alternatives, and then develop the best approach to paying the lowest amount owed. In some cases, an OIC is returned to the taxpayer instead of refusing it, because the taxpayer did not submit the necessary information, filed for bankruptcy, did not include a required application fee or a non-refundable payment with the offer, failed to file the required tax returns, or has not paid tax obligations current at the time the IRS is considering the offer. Remember that if a licensed tax professional doesn't think you're a good candidate for a compromise offer, they'll help you find the next best option for you to resolve your taxes with the IRS.
From the date the offer is accepted, no additional interest will be added to your tax debt or to the amount of the accepted offer. The partial installment agreement allows you to pay the IRS monthly, but your full payment will not cover your full tax bill before the collection law expires. If the IRS believes that you can pay your tax bill in full or by making monthly payments, the agency will not approve your offer. He has been a leader in helping taxpayers and tax professionals resolve tax issues with the IRS, where he worked for 19 years in various compliance positions.
We created the Wiztax system to allow anyone to start the process of resolving their tax issues online and filing them without having to spend thousands of dollars on expensive lawyers or tax resolution firms. The OIC, out of doubt as to collectability, is for people who are unlikely to be able to pay the IRS before their collection statute expires (usually 10 years after the date the IRS evaluates the tax). The IRS can also accept an OIC in other circumstances, for example, if there are “doubts about liability,” when paying the full tax bill would create financial difficulties, or when exceptional circumstances would make paying the entire tax bill unfair and inequitable. If you qualify for an OCI, the IRS will then determine how much it will accept from you to pay off the debt.