How Long Does an Offer in Compromise Take in 2019?

BJ Lynch
Expert Contributor
Last Updated:
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  • With the Internal Revenue Service (IRS) relaxing its standards regarding the terms of an offer in compromise (OIC), more offers might be accepted and the processing time will be reduced.
  • Taking advantage of this will require you to get your OIC marked as processable. This means you need to be sure that you have satisfied the minimum threshold requirements that are necessary to qualify for an OIC.
  • Accuracy is of the highest concern when providing your information to the IRS regarding an OIC. Research the requirements of an OIC, be completely transparent when applying for one, and practice patience.

 

Dealing with the Internal Revenue Service can be like piecing together a puzzle: if you don’t have all the pieces, you will never see the full picture. All of the red tape involved can have you tangled up in a web of confusion and frustration. Due diligence is necessary from the start when working to resolve issues concerning the IRS.

When you find yourself in a position in which the IRS is seeking to collect a debt, don’t panic. Instead, dig your heels in and learn all of the facts surrounding your current situation and all of the options available to you. Understanding what an offer in compromise is will help you determine the answer to the question of how long an offer in compromise takes.

What Is an Offer in Compromise?

The offer in compromise (OIC) program is offered by the Internal Revenue Service (IRS) as part of its Fresh Start initiative. The OIC is a contractual arrangement between the taxpayer and the IRS that allows the taxpayer to settle assessed tax liabilities, plus any interest or penalties, for less than the amount of the debt owed. The OIC program has strict requirements that must be met by taxpayers for them to take advantage of the program.

OIC requirements include, but are not limited to, the following:

How Long Does an Offer in Compromise Take in 2019?
  • A calculation of the taxpayer’s Reasonable Collection Potential (RCP) must be done. In short, this is the amount that the IRS feels it can reasonably collect.
    • The RCP is determined by the liquidation value of the taxpayer’s assets coupled with their monthly disposable income over the 12- to 24-month period described in the payment terms of the arrangement.
    • Liquidation value is determined by the assets that the IRS has a legal right to if it must take action against you.
    • Monthly disposable income is estimated by reviewing the taxpayer’s past and present income.
  • The amount offered by the taxpayer to settle the debt must be equal to or greater than the Reasonable Collection Potential. The IRS will reject the OIC if the amount offered is less than the RCP.
  • Accurate documentation is always required when dealing with the IRS. Be transparent and always double or even triple check the accuracy of any information you share with the IRS.

How Long Will You Wait for an Offer in Compromise?

Patience is vital when applying for an OIC. We exist in a society driven by instant gratification, but the IRS does not share in that lifestyle. Learning to be patient when the IRS is involved can be essential to helping you achieve the desired results.

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No set timelines exist for how long completing an OIC will take. The OIC process can take longer than a year, but the average is roughly six months. Many factors contribute to how much time will be necessary for the IRS to approve or reject an OIC.

Factors that could potentially speed up the OIC process include the following:

  • Your only income is from Social Security or disability.
  • You are over the age of 55, fully retired, and live on a fixed income.
  • You earn less than $30,000 annually in wages on a W-2.

Factors that could potentially slow down the OIC process include the following:

  • Your initial OIC is rejected, and you have to appeal.
  • You have a high balance of debt to settle that is over $25,000. Balances of $100,000 or higher will delay the process even further.
  • Questionable circumstances are involved, such as the following:
    • Multiple loans.
    • Multiple vehicles.
    • Random unexplained deposits.

To increase your chances of having the process be as efficient as possible, you need to ensure that you provide information that is complete, up-to-date, and relevant. Send all documentation that is requested and leave nothing out, even if it seems insignificant. Also, include explanations of anything that may be construed as deceitful on your part, even if you’ve done nothing wrong. If the IRS sends a request for more information, as it usually does, be sure to provide accurate information and do so promptly.

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If your OIC is rejected, you have the option of starting the process over or the ability to file an appeal. Either way, you will only be adding to the time that it will take to bring the process to a conclusion. Though it is difficult to get an OIC approved, it can be done. If your OIC is accepted, you have to hold up your end of the agreement by remaining in compliance with all of the requirements outlined in the OIC.

Are You in Too Deep?

Dealing with IRS issues can be a bit intimidating. Here at Solvable, we strive to provide you with the knowledge and the resources to help you in your tax debt relief efforts. We provide digital platforms that are built to support you in finding the debt relief companies best suited for your needs. Though we offer assistance with many types of debt, tax debt is one of our specialties, and we have confidence that we can pair you with the tax services you require.

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When having trouble with the IRS, the best defense is a good offense. Don’t just wait on them; be prepared by being in the know. Do your research and get connected with people who have your best interests in mind so you can rest easy knowing that your tax debts are being resolved in a professional and timely manner.

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BJ Lynch
Expert Contributor
Last Updated: