The offer in compromise is a program that the IRS offers to taxpayers who wish to request a reduction in the amount of debt they owe to the government. This program can help you reduce or even eliminate your back taxes to the IRS. There are a number of things to understand about the program however. The process that is involved in an offer in compromise is very lengthy and time consuming one. It can take anywhere from a few months to a whole year to receive a response from the IRS on your offer in compromise application.
Offer in Compromise Can Take Time
There are many reasons that it takes so long for the IRS to process your offer in compromise application, we will go over them here so you understand what goes into the process.
The process that must be undertaken by the taxpayer and IRS in regard to an offer in compromise can become lengthy because the taxpayer needs to submit many supporting documents proving some kind of hardship preventing them from paying the full tax liability. These documents can include pay stubs, bank statements, auto loan statements, mortgage statements, and many other documents needed by the IRS to verify your situation.
Process Cannot Be Automated
Since the offer in compromise process cannot be automated by the IRS, they will assign the taxpayer an employee to work with them and process all the information they send to build their case. Since the volume of information is so large and with many other offer in compromise applications being submitted concurrently, the time it takes to process one application can stretch across a whole year in some situations.
Verifying Your Story
The IRS wants to be sure that the taxpayer is telling the truth and is not trying to lie their way into a smaller tax liability. The IRS will take their time to verify all of the taxpayer’s information to make sure they actually qualify for the offer in compromise program. In some cases the IRS will deem a taxpayers case to be insufficient and reject their offer in compromise application. It is important to talk with an expert up front because interest is still accruing on your tax liability as you wait for a decision on your application.