How Long Does an IRS Offer In Compromise Take? Can We Speed Up the Process?
Watch the video below for a video explanation, or just keep reading below.
The simple answer in 2021 is on average five (5) to nine (9) months for not self-employed taxpayers and about 7 months to a year and a half for self-employed taxpayers or those with complex financials.
Some more complex Offers In Compromise may take up to two years to get resolved. Usually, these are self-employment cases with a lot of variables. It is very rare in 2021 that they take this long anymore and as of recently, the IRS has sped up the processing of an Offer In Compromise. Here we will get more into the details on how long an IRS Offer In Compromise will take.
Does the IRS have two years to finish your Offer In Compromise?
The two-year rule for IRS Offer In Compromise goes like this: The IRS has to make a decision within two years, your settlement is deemed accepted. In the thousands of cases we have done at TRP, we never have had an Offer accepted in this way. The IRS seems to always respond. However, this is another reason to send your Offer in by Certified mail with a return receipt. If you will be the lucky one to win by way of the 2-year no-response rule, better make sure you have proof of mailing it.
What is Considered a “Decision” by the IRS within two (2) years?
A decision by the IRS would be rejecting the offer, returning the offer as not processable, withdrawing the offer by you, or a failure to continue to make payments under a periodic payment Offer In Compromise. The IRS taking action on any of these is considered a decision. As long as it is within 2 years of your Offer submission, the IRS won’t automatically grant you a settlement as long as it takes one of these actions.
When you appeal your case from a rejected Offer In Compromise, they do not count this towards the two years.
“Decision” is defined to include the IRS rejecting the offer, returning the offer as not processable, withdrawal of the offer by you, or a failure to make payments under a periodic payment OIC. If you have had any of these happen, the IRS has acted on the offer and made a decision. The time you spend in appeals from a rejected offer is not counted towards the two-year time limit.
What makes some Offer In Compromises take longer than others?
There are a few factors that make your Offer In Compromise take longer than average.
- Self Employment – If you have Self Employment income the IRS transfers your Offer to a different area that always takes longer. They look at the case more in-depth and also want to make sure you are not mixing business and personal expenses.
- High Balance – Offers In Compromise with balances over $25,000 usually take much longer to process. Offers with over $100,000 balances take even longer.
- Complex Circumstances – If you have loans all over the place, multiple vehicles, or a bunch of random deposits that need explaining, your Offer is going to take longer than normal.
- Initial Rejection – If your Offer is initially rejected, adding an appeal in there could add another six (6) months to the process.
What makes some Offer In Compromises faster than others?
These factors make getting an Offer In Compromise much quicker in most cases.
- Social Security or Disability Income – If you only get Social Security or Disability as income things seem to go much faster.
- Fixed Retirement Income – If you are over 55, retired, and getting a fixed income, your Offer will probably process faster.
- Low-Income W2 Earnings – If your only income is from a wage-earning job, and you make less than $30,000 a year, your Offer will also go fast most of the time.
How can I make my Offer In Compromise process as quickly as possible?
The above factors may make your IRS Offer process faster or slower, but you can still get your Offer to go as fast as it can. The two most important ways are as follows:
Make sure you have all the information the IRS initially requests when you send the Offer. Make sure all the bank statements you submit have all the pages. Even if there is a page that looks useless, if your bank statement pages are numbered, still include it. The agent will ask later, “Where is page 5?” even if it is a blank page. Better to have it be complete and upfront.
If something in your financials does not look right, provide a good explanation for it in the cover letter. If you have more deposits than you make in income, then explain why you have that extra money. Explain if it is a loan or something else and why it should not be considered as income. If you have any medical conditions, explain them in the cover letter and include supporting documentation.
Although getting an IRS Offer In Compromise can be difficult, it can be done. How long will your Offer In Compromise take? It depends on the above factors and your responses. Give good responses and you will help speed things up. You might be one of the lucky ones that have their Offer done in a few months. If not, just wait and see what happens. Some people call the IRS Taxpayer Advocate over their Offer In Compromise. They usually do not help. See our results page for our most recent Offer In Compromise results on the left side of our About Us page.
Owe more than $20,000 to the IRS or state? Get expert help from the best tax attorneys in the country. Fill out the contact form here or call us at (888) 515-4829 and one of our tax attorneys will call you back.
Pingback: How To Do Your Own Offer In Compromise - Tax Resolution Professionals Guides and InformationTax Resolution Professionals Guides and Information
thanks for posting it
explained the offer in compromise timelines very well
Thank you for the info! Really helpful!
Great post exactly what I needed