People often complain that they should not file an Offer in Compromise for a client because the acceptance rate is only 36%. This percentage rate has been consistent for years (+/- 5%). So that leads many tax pros to question, “What are the chances of getting my client OIC accepted”?
The Offer in Compromise acceptance rate by the IRS depends on several factors. It is challenging to provide an exact probability of acceptance without knowing the specific details of your financial situation and tax liabilities. However, I can give you some general information on the factors that the IRS considers when evaluating OIC applications and how you can improve your chances.
Offer in Compromise Acceptance Rate: What the IRS Looks For
The IRS is going to look at several factors, and several of these factors make your client instantly ineligible for an OIC. These include:
- Can your client full pay the balance before the CSED expires?
- Is your client currently in bankruptcy?
- Is your client out of compliance with filing tax returns?
- Has your client missed their current estimated payments for the current year or the last required federal tax deposits?
If you can answer ‘NO’ to the previous questions, they may be an eligible candidate for an offer.
Next, you must show that paying your tax debt in full would cause financial hardship or a significant economic burden. When providing financial information to the IRS, be honest and realistic when valuing assets (Make sure that no assets are left off these statements as this would ruin the clients’ credibility and your reputation in front of the IRS) and carefully review the taxpayers’ income and expenses. If your expenses are outside the allowable amount, is it necessary, and can it be justified?
You need to make a reasonable and realistic offer that reflects your client’s ability to pay. Lowballing your offer makes the IRS less likely to accept it and negotiations more challenging. Remind your client that they must stay compliant during the period you are negotiating with the IRS, plus five years in the future.
The bottom line is this: If you submit an offer offering the correct amount, including all backup documentation, the IRS must accept this offer. You should never get an OIC denial. Using IRS Solutions Software, you will have the acceptable terms to your offer easily given to you. Schedule a demo today.
ABOUT THE AUTHOR
David Stone
Helping Accountants Save Time at IRS Solutions
David Stone, an enrolled agent and founder of IRS Solutions, leverages his comprehensive IRS experience to empower tax professionals in navigating complex tax disputes. A proud alumnus of California State University Northridge, David’s journey began as a Revenue Officer at the IRS, where he embraced diverse roles, including working the lien desk and becoming an Offer in Compromise specialist. His transition from the IRS to founding IRS Solutions Valencia was driven by a vision to simplify tax resolution. David’s ingenuity led to the creation of IRS Solutions Software, embodying his commitment to providing effective tools and sharing his extensive knowledge with professionals in the field. As the bestselling author of “Tax Breaks for the Rich and Famous” and “The Great Tax Escape,” David’s expertise continues to guide business owners and accountants alike.
