The Offer In Compromise (OIC) Process

The Offer In Compromise process is often a lengthy one taking up to a year and sometimes longer. The process goes somewhat like this although there are always exceptions. Sometime after you submit your offer you will receive a letter from Memphis Tennessee or Brookhaven, New York stating that they have received your offer and that you will be contacted by a certain date.
 

All this letter means is that your offer is processable and they have agreed to investigate it. A few months later you will receive another letter stating that your offer has been assigned and requesting additional documentation. You will be given anywhere from 2 weeks to a month to provide the requested documentation. Generally you should be allowed 30 days to provide additional documentation. If you need additional time be sure and call the person assigned to your offer and let them know. Do not miss a deadline without letting them know. It is a good way to get your offer returned.

A couple of weeks after you have mailed in any additional documentation requested, you may want to give the offer specialist assigned a call to get a feel for how he or she feels about the offer. They are very busy and may not have even looked at it yet and if not, they will at least give you an idea of when they will be reviewing your case. The Offer In Compromise process has become very automated over the years and you will probably not even talk to the person handling your case unless you make contact yourself. 

I feel that it is a good idea to talk to the offer specialist after they have reviewed your documentation. For example, if you are self-employed they probably used a profit and loss statement that was a few months old to compute the future income component of your offer. This may not really reflect your income though, as self-employment income goes up and down due to many factors. If this is the case and you feel that too high of an income figure was used, you could suggest that they use an average of 5 to 10 years income to come up with a more realistic amount. Be careful though. Check the numbers yourself first to make sure the average is really lower than the current amount.

 After your documentation has been reviewed the Offer Specialist will send a letter with their computation either accepting your offer amount, proposing a higher offer amount or advising you that their calculations show that you can pay the tax liability in full and that you do not qualify for an Offer In Compromise. You will be given a chance to respond by providing additional documentation. If it is determined that you do not qualify for an offer and you do not respond, then the case will be sent to an independent reviewer. I have never seen an independent reviewer not concur with the offer specialist. You will then be sent a rejection letter and you will have 30 days from the date of the letter to file an appeal.

If you do not receive a rejection letter, you will receive an acceptance letter. The date of the letter starts the clock ticking to meet the terms of the offer based on the payment terms on the Form 656.

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