7 Fascinating Statistics About the IRS Offer in Compromise

By Highland Tax Group

If you’re struggling under the burden of significant tax debt, it may be possible to achieve a clean slate without paying significant penalties or late fees, and settle with an IRS Offer in Compromise. If you’re suffering economic hardship or you are otherwise able to prove a “doubt as to collectability,” you may be eligible for an offer in compromise. OIC acceptance is a struggle, but as these statistics demonstrate, it’s far from hopeless:

1. Offer in Compromise (OIC) acceptance rates are typically quite low.

Achieving an IRS offer in compromise can be an uphill battle, in part because the qualifying conditions are so strict. In 2013, over 74,000 offers were received, but only 31,000 were accepted.

2. OIC acceptance is on the rise.

Acceptance rates for the IRS Offer in Compromise process may be low, but acceptance is actually far more likely now than it was prior to the 2008 recession. During the early and mid 2000’s, acceptance rates hovered between 17 and 26 percent. Between 2009 and 2013, however, acceptance rates experienced a 94.8 percent increase.

3. The average OIC level hovers around $6,000.

The dollar value of offers in compromise has remained relatively stable over the years. In 2014, the average OIC was worth $6,643.

4. The IRS accepts nearly $200 million in OIC’s each year.

The acceptance rate for OIC’s may be low, but the program remains costly for the IRS, which accepted $195 million in offers in 2013 and $179 million in 2014.

5. IRS communication with taxpayers is suffering.

Securing an IRS Offer in Compromise can be complicated, in part because declining resources have caused the IRS to lag in reaching out to taxpayers. A recent Treasury Inspector General for Tax Administration study found that the IRS failed to contact taxpayers by the promised date in 73 percent of cases.

6. OIC streamlining has proven effective.

Thanks to recent changes, taxpayers are now able to pursue streamlined IRS Offer in Compromise, in which they contact OIC staff via phone. On average, these streamlined OICs are processed 28 days sooner than non-streamlined offers.

7. OICs allow taxpayers to reduce their burden for pennies on the dollar.

According to the National Taxpayer Advocate, the IRS collects just fifteen cents on the dollar for two-year-old tax debts, and even less for tax debts exceeding three years, in relation to the IRS Offer in Compromise process.

Call Our Office

An IRS Offer in Compromise is a great option for resolving your tax situation, but because acceptance rates remain low, it is in your best interest to work with someone skilled at preparing the appropriate documents and handling the IRS. Call us at 720-398-6088 to learn more about the IRS Offer in Compromise process.