Statistics recently released by the IRS for 2013 to 2014 have revealed that the tax agency is accepting more Offers in Compromise (OIC) at a higher rate than they have since the dawn of the century. Last tax season, the IRS accepted 40% or more of all OIC offers submitted. This is exceptionally higher than the average of 25% to 30% which were accepted in the early 2000s.
What Is an Offer in Compromise?
When an individual extends an Offer in Compromise to the IRS, they are asking if they can settle their tax debt and pay less than the amount the IRS has determined they owe. Historically, the IRS has not been very generous in their acceptance of OICs. However, the current upswing in the number of OICs being accepted is promising for the thousands of Americans who are currently feeling pressure from the IRS
Who Qualifies for an OIC Consideration?
An OIC is more than haggling and striking a deal with the IRS. If this were the case, then everyone would be able to have his or her tax bill reduced to a minimum. In order to qualify, individuals must show that they are affected by one of the following conditions:
- There is a reason for the IRS to believe that they will not be able to collect the tax bill from you today or in the future. This is referred to as “doubt as to collectibility”
- Because of an exceptional circumstance, if an individual were to pay their full tax bill, they would face stress, “economic hardship” or the collecting of money owed would be “inequitable” and “unfair”
For those who are uncertain as to whether or not they qualify for an OIC, speak to a professional tax attorney such as Scott Scammahorn, J.D., LL.M. to discuss your specific situation.
What Should I Do If I Am Rejected for an OIC?
There are typically two reasons why an OIC has been rejected (though the IRS will inform you through a written letter why your application was denied). The most common reason is that your offer of repayment was too low. The other reason why your offer may be denied is that you are someone they consider to be a “notorious character”, such as someone who has been convicted of a serious crime.
While a growing number of Americans are qualifying for a OIC, the fact is that the majority are still being denied. If you have had your application denied, do not give up. At the Scammahorn Law Firm, P.C. we have helped our clients come to fair and amicable deals with the IRS, regardless of the tax issue they face.
We invite you to contact us today to speak to an experienced tax attorney today at (903) 595-1000.