When the IRS rejects an Offer in Compromise proposal, they will generally send prompt notice to the applicant explaining the reasons why the Offer in Compromise has been rejected.
All cash payments that were made to the IRS when the Offer in Compromise was submitted will not be refunded to the taxpayer. This is important for any taxpayer to remember, it can be very frustrating to have thousands of dollars not be refunded when your offer is rejected.
Submitting New Offer
In the event that taxpayer wishes to submit another Offer in Compromise to the IRS, they need to be careful not to submit the exact same offer again. If the last offer was too small and the taxpayer’s financial situation has not changed, they need to resubmit the offer with a larger amount to compromise.
If there financial situation has changed or the information is more than six months old, new financial information needs to be gathered and put together for a new offer.
Adverse Collection Action
It is important for taxpayers to understand that once their Offer in Compromise has been rejected, the documentation and other evidence previously presented to the IRS will provide Collection personnel with a roadmap of the taxpayer’s assets.
Return of an Offer in Compromise
In the event the IRS returns an Offer in Compromise to the taxpayer, it is not considered a rejection and the taxpayer will be unable to appeal the matter. This is due to the taxpayer’s ability to provide the requested information, the Offer in Compromise could not be processed, or the offer was made simple to delay collection proceedings from taking place.
Appealing a Rejected Offer
The taxpayer will have the ability to appeal a rejected Offer in Compromise regardless of whether the offer was based solely on doubt as to liability, collectability, or effective tax administration. The taxpayer should submit their appeal to the Appeals Office within 30 days of receiving notice of their rejection.