The offer in compromise represents a promising debt solution for many taxpayers, however, people make a lot of offer in compromise mistakes along the way. Due to these mistakes, the rejection rate is notoriously high. That doesn’t mean you should be dissuaded from making an offer, however, as many rejections are sparked by simple errors. To increase the odds of acceptance, be sure to avoid these common offers in compromise mistakes:
Seeking Both a Doubt as to Liability and Collectability
Your offer in compromise should take one of two approaches:
- Doubt as to liability — you dispute the existence or amount of tax debt.
- Doubt as to collectability — you suspect that you won’t be able to handle your debt without a compromise.
The IRS does not allow for you to simultaneously pursue these options. If you genuinely believe your tax debt was assessed in error, you should submit your initial offer based on doubt as to liability. If this is rejected, you can later follow up with a doubt as to collectability OIC.
Depending on Emotional Details
With doubt as to collectability offers, the IRS relies on cold, hard numbers. Yes, you can appeal to emotions in accompanying explanations, but you also need clear proof that you’ll be unable to pay your tax debt based on the current amount.
Neglecting Documentation
The IRS is far more likely to accept offers that are verified by thorough documentation. From credit card statements to pay stubs, several forms of proof should be submitted to demonstrate that you are trustworthy — and that the numbers cited in your application didn’t come out of thin air. No matter how compelling your case, you risk rejection if you fail to provide the proof the IRS demands.
As you navigate the many complications of submitting an offer in compromise, look to the Highland Tax Group for guidance. We’d love to get you on the path towards OIC acceptance. Contact us today to learn how we can help.