If the IRS rejects your Offer in Compromise (OIC), you have 30 days from the date on your rejection letter to file an appeal. You can request a review by the IRS Independent Office of Appeals, explaining why you disagree with the decision. During the appeal process, the IRS typically suspends collection activities, giving you time to present your case without facing levies or wage garnishments.
At the law firm of John D’Amato, PLLC, we help New York taxpayers resolve complex IRS and state tax problems, including appealing rejected Offers in Compromise. With experience handling both federal and New York State tax issues, our team understands how to identify errors in IRS calculations and build strong appeals.
Understanding Your Appeal Rights After an OIC Rejection
When you receive an OIC rejection letter, it’s not the end of the road. The IRS provides a formal process to challenge that decision through its Independent Office of Appeals. This office operates separately from the IRS division that rejected your offer, providing an objective review of your case.
Your rejection letter will explain why the IRS turned down your offer. Common reasons include:
- The IRS believing you can pay more than you offered
- Disagreements over asset values
- Disputes about your income or allowable expenses.
Understanding the specific reason for rejection is the first step toward building a successful appeal.
The 30-day deadline is strict. If you miss this window, you lose your right to appeal that particular rejection. The deadline runs from the date printed on the rejection letter, not the date you received it. For this reason, you should act quickly once you get the letter.
How the OIC Appeal Process Works
The appeals process involves several steps. First, you’ll need to file your appeal with the same IRS office that sent your rejection letter. Don’t send your appeal directly to the Independent Office of Appeals, as this will delay your case.
After you file, an Appeals Officer who wasn’t involved in the original decision will review your case. This person will examine your arguments, look at any new information you provide, and may contact you to talk about the issues through a discussion called a conference. Appeals conferences can happen by phone, through correspondence, or in person.
You can start your appeal by preparing Form 13711 (Request for Appeal of Offer in Compromise) or by writing a letter that includes specific information about your disagreement.
Your appeal must include:
- Your name, address, Tax Identification Number, and daytime phone number
- A statement that you want to appeal the rejection to the IRS Independent Office of Appeals
- A copy of your rejection letter
- The tax periods or years involved
- A list of specific items you disagree with and why
- Facts and documentation supporting your position
- Any legal authority you’re relying on, AND
- Your signature under penalties of perjury.
Identifying What to Dispute in Your Appeal
The key to a successful appeal is pinpointing exactly where you disagree with the IRS and backing that up with evidence. Your rejection letter should include an Income/Expense Table (IET) Worksheet and an Asset/Equity Table (AET) Worksheet. These documents show how the IRS calculated your ability to pay.
Compare the figures on these worksheets to what you submitted on your original Form 433-A (OIC) for individuals or Form 433-B (OIC) for businesses. Look for discrepancies in how the IRS valued your income, assets, or allowable expenses.
For example, you might dispute the IRS’s determination of your income if they overstated your earnings. Or you might challenge their valuation of your vehicle or real estate if you have evidence supporting a different value. Each disputed item needs supporting documentation, such as pay stubs, bank statements, appraisals, or loan statements.
If you believe you have special circumstances that the IRS didn’t consider, your appeal is the time to raise them. The IRS may not have accounted for medical conditions, age-related limitations, or other factors that affect your ability to pay. Attorney John D’Amato has helped clients identify overlooked circumstances that strengthened their appeals.
What Happens During the Appeals Conference
Once the IRS starts processing your appeal, an Appeals Officer will be assigned to your case. This person will review everything you submitted and may reach out to schedule an appeals conference, an informal discussion of your settlement options. The goal of the Appeals Office is to resolve disputes without litigation.
The Office of Appeals has the authority to compromise the amount of tax owed to resolve a dispute. This means the Appeals Officer can offer you a fair settlement based on the probable outcome if your case went to court.
During your conference, be prepared to explain your position clearly. Bring any additional evidence you’ve gathered since filing your original offer. The Appeals Officer will evaluate the “hazards of litigation” for the government, meaning how likely they’d be to win if the case went to court.
You can represent yourself in the appeal, but many taxpayers find it helpful to have professional representation. Attorneys, CPAs, and enrolled agents are authorized to represent taxpayers before the IRS Appeals Office.
Collection Activity Stops While You Appeal
One important benefit of filing a timely appeal is that the IRS generally suspends collection activities. According to IRS Topic 204, the statutory time within which the IRS may engage in collection activities is suspended during the period a timely appealed rejection is being considered.
This means that while your appeal is pending, the IRS typically won’t levy your bank accounts, garnish your wages, or take other enforcement actions. They may, however, file a Notice of Federal Tax Lien to protect their interest in your assets.
This suspension gives you breathing room to work through the appeals process without facing immediate financial consequences. It’s one reason why meeting that 30-day deadline is so important.
OIC Statistics and What They Mean for Your Appeal
Understanding the overall OIC landscape can help you set realistic expectations. According to IRS data, in 2024, taxpayers submitted 33,591 Offers in Compromise, and the IRS accepted 7,199 of them, totaling $163.4 million in settled tax debt.
These numbers reflect initial offer decisions, not appeal outcomes specifically. However, they show that many taxpayers face rejection and need to either appeal or adjust their approach. A well-prepared appeal that addresses the specific reasons for rejection can change the outcome.
The appeals process offers a genuine opportunity to have your case reconsidered by a fresh set of eyes. Appeals Officers evaluate cases independently and can reach different conclusions than the initial reviewer.
Returned Versus Rejected Offers: Know the Difference
It’s important to understand that a “returned” offer is different from a “rejected” offer. The IRS returns offers when there are procedural problems like missing tax returns, bankruptcy filings, incomplete applications, or failure to include the required fee or payment.
A returned offer doesn’t come with appeal rights because the IRS never actually evaluated it on the merits. If your offer was returned, you’ll need to fix the problem and resubmit. If it was rejected after a full review, that’s when you can appeal.
Check your letter carefully to see which situation applies to you. The procedures you’ll follow depend on whether the IRS returned or rejected your offer.
Alternatives If Your Appeal Doesn’t Succeed
If your appeal is denied or you decide not to pursue one, you still have options. You could submit a new Offer in Compromise with a higher offer amount that meets the IRS’s calculated reasonable collection potential. Sometimes adjusting your offer by a few thousand dollars can make the difference between rejection and acceptance.
Other alternatives include applying for an installment agreement, which lets you pay your tax debt over time, or a “Currently Not Collectible” status if you can’t afford to pay anything. Each option has different requirements and consequences.
At John D’Amato, PLLC, we evaluate each client’s situation to determine which approach makes the most sense. Sometimes an appeal is the right move. Other times, a different resolution strategy may serve you better.
Frequently Asked Questions on Appealing an Offer in Compromise
How long do I have to appeal a rejected Offer in Compromise?
You have 30 days from the date on your rejection letter to submit an appeal. If you miss this deadline, the IRS won’t accept your appeal request, and the rejection becomes final.
What form do I use to appeal an OIC rejection?
You can use Form 13711, Request for Appeal of Offer in Compromise, or you can submit a written letter containing the same information. Either method works as long as you include all required details and documentation.
Will the IRS continue collection activity while my appeal is pending?
Generally, no. The IRS suspends collection activities while a timely-filed appeal is being reviewed. However, they may still file a tax lien to protect their interest.
Can I represent myself in an OIC appeal?
Yes, you can represent yourself. However, the appeals process involves technical tax calculations and legal arguments. Many taxpayers benefit from having an attorney, CPA, or enrolled agent represent them.
Key Takeaways
- You have exactly 30 days from the date on your rejection letter to file an appeal.
- Use Form 13711 or a detailed written letter to request review by the IRS Independent Office of Appeals.
- Identify specific disputed items by comparing the IRS worksheets to your original application.
- Provide documentation to support each item you’re disputing.
- Collection activity generally stops while your appeal is pending.
- An appeal gives you a fresh review by someone who wasn’t involved in the original rejection.
Contact John D’Amato for Help With Your Tax Resolution Case
If the IRS rejected your Offer in Compromise, you don’t have to face the appeals process alone. Getting the appeal right the first time is critical, especially given the tight 30-day deadline.
John D’Amato is a top-rated bankruptcy and tax resolution attorney in New York with extensive experience helping taxpayers resolve IRS and state tax problems. Visit John D’Amato’s profile to learn more about his experience and results. Call (716) 703-9099 to schedule a free consultation.