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How long does an Offer in Compromise appeal take?

An Offer in Compromise (OIC) allows you to settle tax debt for less than the full amount owed. The IRS Office of Appeals has the mission of resolving disputes that arise between the government and a taxpayer in a fair and timely manner.

Appeals offers one more opportunity to resolve a case before filing a petition with the tax court. If your OIC is denied, you have the right to appeal, but it may take longer than you'd expect. You should expect to wait between 90 days and one year. In this post, we’ll explain why it can take so long.

The outliers

A recent report from the U.S. Government Accountability Office (GAO) analyzed the processing times of more than 35,000 OIC appeals from 2014 to 2017. One of the positives was that appeals rarely take more than two years and only about 10 percent take longer than one year. These are likely the most complex, borderline cases.

On the other end of the spectrum, the IRS issues a decision in less than 90 days about 15 percent of the time. These may include appeals where an offer was outside the realm of reasonable or the appeal fails to raise a sufficient legal issue.

Staffing shortfalls and upcoming retirements

The average number of days to get a decision was 240 days. This may be in part because the number of people working at Appeals has fallen to 1,345 in 2017 from 2,172 back in 2010. Nearly one-third of its workforce is also eligible for retirement, which could mean fewer people with subject matter expertise.

As with most administrative law matters, it is important to make your strongest arguments right away to avoid an appeal if at all possible. Because the acceptance rate for OICs is generally less than 40 percent, a tax attorney can offer a candid assessment and help build a strong case in your favor.

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