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Having your offer in compromise (OIC) denied can be frustrating, but it happens since the Internal Revenue Service (IRS) only accepts 90 percent of all offers. Understanding very well why your OIC was rejected is the first step that will help you when you want to appeal an Offer in Compromise that was rejected. You need this information to have an upper hand in the case and to even know whether an appeal is going to be necessary.
There are a number of reasons why you could be denied an Offer in Compromise by the Internal Revenue Service (IRS). However, the most common causes include the following. The Internal Revenue Service (IRS) might have assessed the offer and found it too low or unpractical. The amount that you offered could have been less than the “reasonable collection point” (RCP). When you fail to provide receipts and supporting documentation, IRS could reject your offer. If you have been convicted of a serious crime, then IRS might reject your Offer in Compromise. Also, failure to include an application fee with your OIC could deem it rejected by the IRS. Lastly, your offer can be denied if you are living above the IRS Allowable Living Expenses.
If your offer is denied, usually the IRS should explain to you in writing. If it fails to do so, you can contact a tax attorney or a qualified professional to make the request on your behalf. You can file an appeal if you receive your letter of rejection within 30 days. If it has been longer than 30 days, your request for appeal will not be accepted. The letter that you receive provides you with details on how to file your appeal, including where and when to send it. The IRS provides an online self help tool, if you meet the requirements. However, if you do not meet the requirements you can still use other methods.
You can start by completing Form 13711. This form entails the details for the request for Appeal of Offer in Compromise. Next, you will fill in Form 2848, which involves the Power of Attorney and Declaration. This form will be useful to you if a tax professional is to sign it. After completing both forms, you can send the letter to the address provide for you in your letter of rejection.
If you do not wish to fill out Form 13711, you can write to the IRS through the address on your rejection letter. In your letter, state your intent to appeal your Offer in Compromise being denied. When you do this, do not forget to include your contact information, a copy of the rejection letter the IRS sent you, the tax years your OIC encompasses, and details of the OIC that you do not agree with. Present documents or facts that support your disagreement.
When you are through with your letter, sign it declaring that all information is true “under the penalties of perjury” and send it to the address you were provide within your letter of rejection.
However, filing an appeal with the IRS is not your only option. You can file to make a larger offer by resubmitting your original Offer in Compromise paperwork with a letter detailing your request to increase your offer amount.