Recent statistics show that only about 20% of Offers in Compromise that are submitted are accepted. The rest are rejected. Why are so many OIC’s rejected? I believe that there are several reasons for the high rate of rejection.
There are many unscrupulous firms advertising on the radio, television and the internet that they can settle taxes for “Pennies on the Dollar”. Then, when desperate people contact them, they charge thousands of dollars and promise them settlements of only a small percentage of what the taxpayers owe.
After submitting an OIC for these people, and many months later they advise their client that the IRS has rejected their Offer in Compromise. In many of these cases, they never should have filed an OIC in the first place, because the client simply didn’t qualify for one. For more information about this shady business, please see our website: www.martellelaw.org/oic.html
What can a consumer do to protect themselves from these shady firms? I suggest that people contact the Better Business Bureau to investigate anyone they are planning on hiring.
Aside from hiring unscrupulous firms, there are other reasons why people have Offers rejected. In our office, we have identified a few main reasons for rejections.
When an Offer in Compromise is filed, taxpayers are required to file every tax return on time and pay every single tax that comes due after the filing of the Offer. Some people are just unable to stay in compliance and lose their OIC for that reason.
If a taxpayer’s financial circumstances change for the better, while they are in the Offer processing period, they might not qualify for an OIC due to too much income.
These reasons for rejection can be dealt with if a competent IRS law firm designs the OIC and assists the client in staying in compliance with the tax returns and payments to the IRS during the Offer process.
Our firm has a very high percentage of our Offers in Compromise accepted by the IRS. If you would like an honest, competent evaluation of whether you qualify for an Offer, please visit our website at: www.martellelaw.org/oic.html