How long do I have to wait to reapply if my offer in compromise irs is rejected?
How long do I have to wait to reapply if my offer in compromise irs is rejected?
Introduction:
This article will discuss the timeframe for reapplying, the reasons for rejection, and strategies to increase your chances of being accepted. The IRS Offer in Compromise (OIC) program is a lifeline for taxpayers who are struggling with significant tax debt; it allows eligible individuals to settle their outstanding tax obligations for less than the total amount owed. However, not all applications are approved, and if your Offer in Compromise is rejected, you may be wondering how long you must wait before reapplying and what strategies to increase your chances of being accepted.
It's critical to comprehend the reasons why the IRS can reject an Offer in Compromise before talking about the reapplication procedure. Typical explanations for rejection consist of:
Insufficient Offer Amount: The IRS uses your assets, income, and spending to calculate your ability to pay. Your offer can be turned down if it doesn't satisfy the IRS's reasonable collection potential (RCP).
Failure to File Required Tax Returns: Before reviewing an OIC application, the IRS often demands that all tax filings be current.
Failure to Make Estimated Tax Payments: Before filing an OIC, self-employed people and those who are obligated to make estimated tax payments must comply.
Absence of Information or Documentation: Rejection may result from incomplete paperwork or missing financial records.
Doubt as to Collectibility Not Established: The IRS needs to be persuaded that it is improbable that the entire tax debt will be collected.
Public Policy Considerations: In situations when approving an application would be against the public interest, such as in fraud cases, the IRS may reject it.
Not Making the needed Initial Payment: If an application is filed with the needed upfront payment, it may be rejected if it is not made.
Addressing the difficulties prior to reapplying is made easier when one is aware of the reasons for rejection.
When to Reapply After Being Rejected
After being rejected, there is no set amount of time that must pass before reapplying for an offer in compromise. However, a number of variables affect the timing:
1. Filing an appeal (within 30 days) of the rejection
You have 30 days from the date of the rejection notification to file an appeal if you think your OIC was unjustly denied. IRS Form 13711, Request for Appeal of Offer in Compromise, should be used to file this appeal.
You might be able to avoid reapplying if the appeal is successful.
You have the option to reapply with a different OIC if the appeal is denied.
2. Examining and Modifying Your Offer (one to three months)
It is advised that you evaluate the reasons the IRS rejected your OIC for at least one to three months after the denial.
3. Making a Compromise New Offer (After 3-6 Months)
You can submit your OIC again at any time after resolving the concerns that caused it to be rejected. However, unless your circumstances drastically worsen, the IRS is unlikely to accept a new offer if your financial status stays the same.
4. Modifications to the Financial Status (Varies)
It can be prudent to wait until these changes are reflected in your financial records before reapplying if you have gone through a significant financial hardship (such as losing your job, incurring medical bills, or experiencing a slump in your business). When the IRS observes a diminished ability to pay, they are more likely to grant an OIC.
How to Increase Your Prospects When Reapplying
To make your application stronger if you intend to reapply for an Offer in Compromise, do the following:
Respond to the IRS's worries
Examine the rejection letter and address any particular problems the IRS pointed up.
Consider raising the offer amount to meet IRS requirements if it was too low.
Verify Complete Tax Compliance
All past-due tax returns should be filed.
If necessary, make projected tax payments.
Keep up with all of your tax responsibilities.
Make Financial Documentation Better
Keep thorough records of your earnings, outlays, obligations, and assets.
Provide proof of greater financial difficulty if you can.
Take into Account Consulting a Tax Expert
A tax lawyer or certified public accountant with competence in OIC filings can assist you in structuring your offer to satisfy IRS regulations.
Additionally, they can represent you in negotiations with the IRS.
Make use of the IRS Pre-Qualifier.
Before filing a new application, taxpayers can use the IRS's OIC Pre-Qualifier Tool on its website to find out if they qualify.
Make a reasonable offer.
Your reasonable collection potential (RCP) is determined by the IRS using your projected income and available assets.
The range of your offer should fall within what the IRS deems to be acceptable.
Offer In Compromise At CPA Clinics:
An Offer In Compromise (OIC) is a valuable option offered by tax authorities that allows eligible taxpayers to settle their tax liabilities for less than the total amount owed. This arrangement is designed to provide a fresh start for individuals or businesses facing financial hardship and unable to pay their full tax debt.
Conclusion:
Reapplying for an Offer in Compromise does not need a waiting period, but it is important to address the grounds for rejection and make improvements to your application before doing so. Appealing within 30 days can give you another chance without requiring a complete reapplication if you feel the denial was unreasonable. Furthermore, you can greatly improve your chances of getting approved on your subsequent try by making sure you are in accordance with tax laws, modifying your offer, and seeking advice from a tax expert.