The IRS offer in compromise (OIC) could be a great option for resolving significant tax debt, but beware: securing an accepted offer can be a struggle. Unfortunately, while low acceptance rates are far from new, the problem appears to be accelerating, as we explain below:
The IRS Is Chronically Understaffed
Much of the struggle surrounding the OIC program can be blamed on the chronic understaffing of (and minimal budget for) the IRS in general. This issue has become dire during the pandemic, but it was already alarming long before COVID took over.
The IRS processes millions more tax returns than it did just a few years ago, and yet, its staff has seen huge reductions since 2010 due to major budget cuts. Fewer employees are available to handle all areas of tax policy, including audits, installments, and, of course, OIC applications.
How Staffing Issues Impact OIC Applications
With a smaller IRS workforce comes a reduced ability to process applications for programs such as the OIC. What’s more, IRS employees are less likely to receive the extensive training they need to properly handle offers. This increases the potential for delays and mistakes, thereby also making a lengthy appeals process more likely.
The Need for a Tax Resolution Specialist
Despite the difficulty involved with getting an OIC accepted, this still remains a viable path to dealing with major tax debt. That being said, it’s more important than ever that you handle this process strategically. Even minor errors can lead to a swift rejection, so it’s worth your while to work with a tax resolution specialist.
Worried about navigating the IRS offer in compromise process? At Highland Tax Group, our strategic approach will improve your odds even in the midst of extraordinary challenges. Contact us today to learn more.