- Compile a list of specific items from the Asset/Equity and Income/Expense tables in the denial letter and explain why you disagree with each.
- Review your submitted Form 433-A (OIC), the tables provided with the denial, and Publication 1854 when preparing documentation.
- Gather current proof of income, deductions, loan balances, utilities, healthcare costs and asset values that match Form 433-A (OIC) instructions.
- Consider using Form 13711 to organize the appeal request for disagreed items.
For background on this issue, read our Offers in compromise guide.
After an OIC Rejection
The IRS may reject an offer in compromise application. In that case the application fee is not refunded and any payments made with the application are applied to the tax debt. The guidance states that a taxpayer can appeal the rejected OIC with the IRS Independent Office of Appeals.
Republic Tax Relief provides private tax-resolution services for individuals and businesses with IRS or state tax issues. The firm offers a free, no-obligation initial consultation to discuss whether its services may be suitable for those with questions about existing tax-debt situations.
Compile a List of Disagreed Items
As preparation for the appeal request, create a list of each specific item from the Asset/Equity Table and Income/Expense Table that accompanied the denial letter. For each item, include an explanation of why the amount is disputed.
The guidance suggests reviewing the tables sent with the denial letter, the submitted Form 433-A (OIC), the supporting documentation that was provided, and Publication 1854. A blank copy of Form 433-A (OIC) can be used if the original completed version is unavailable.
Review Income and Expense Calculations
Examine the Monthly Income/Expense Statement in Section 7 of Form 433-A (OIC). Verify that reported gross earnings, deductions, pension or Social Security income, vehicle loan payments and balances, residence lien payments and balances, utilities, rent, insurance, property taxes, transportation costs, healthcare expenses and court-ordered payments are supported by current proof such as pay stubs, lender statements and receipts.
Note that amounts on the Monthly Income/Expense Statement may differ from those used in the Income/Expense Table, which applies Collection Financial Standards derived from national and local data for food, clothing, miscellaneous, out-of-pocket healthcare, housing, utilities and transportation.
Check Asset Valuations and Attachments
Confirm that cash, investments, real property, vehicles and other assets were valued according to Form 433-A (OIC) instructions. Certain assets such as vehicles and real estate are to be valued at quick-sale value. Vehicle valuation may start from a trade guide fair market value reduced by 20 percent. Real estate may use an appraisal, replacement cost or taxable value.
Ensure all required attachments listed at the bottom of page 8 of Form 433-A (OIC) are included with the appeal materials. The guidance recommends verifying calculations in the sections covering cash and investments, real property, vehicles, other assets and self-employment information.
IRS guidance checked .
General information only, not individual tax, legal, or financial advice. Rules, deadlines, and eligibility depend on your circumstances. Check current official guidance or consult a qualified professional.
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