I am a former IRS Agent who has worked and taught the "Offer-in-Compromise" Program in the IRS Regional Training Center. The Offer-in-Compromise is a much talked about program and advertised as "pennies on the dollar" settlement.
FACTS: Approximately 52,000 "Offer-in-Compromise" (hereafter referred to as OIC) are filed each year and that number will be rising at a record pace. 12,000 OIC are accepted each year. The program has an acceptance rate of about 22%.
OICs are worked only by an IRS Tax Specialist whose expertise is OIC. All the tax specialists are trained to scrutinize the OICs. I bite my tongue in saying this; it is my firm belief that the Agents working these cases look first to reject rather than to accept an OIC. Why, simply because it is far less work for an Agent. It is much easier to send a rejection letter than fully document the case for acceptance. Therefore the Agents look for any reason they can use to reject the OIC. An OIC rejection closes out their inventory quickly, making the Agent look very efficient in managing their case load.
The Key to having your OIC accepted is listed below:
1. Fully document the case. Get every piece of paper you can, verify every number you put on the Form 433A, the IRS financial statement.
2. Keep up with the OIC. As soon as the case is assigned, call the Agent every two weeks to ask for an update. This lets the Agent know you really want this pushed through and that you can furnish additional documents if needed. Most Agents will not even contact the Taxpayers or their representative, they will usually just send out a rejection letter. It is the easy way out.
3. Make sure the case makes sense. If you believe the Agent will have questions, send in an additional statement the clarify questions you think will arise.
4. Know that IRS will look at the history of the taxpayer and income levels for the last five years. If there have been major fluctuations in your income level, please document the fluctuations in detail.
5. Believe it or not, many offers are rejected because payments were not attached or the OIC was not signed. To avoid a rejection, you should have a tax professional review the OIC before submitting.
I have been in this business a number of years and truly believe you would be a fool not to have professional representation. Find a professional tax firm specializing in OIC, which is your very best chance of having the OIC accepted.
Former IRS Agents who have worked the Program are best suited for this job; after all, they know the tax policies.
Michael D. Sullivan is a seasoned IRS tax expert. Learn more about Michael and the services he provides at http://www.freshstarttax.com/.
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