Millions of people find themselves owing money to the Internal Revenue Service. Thankfully, the tax code provides ways for taxpayers to address their debt. One process involves filing an offer in compromise, which is a type of settlement agreement. Things don’t always go as preferred, and a letter to a Texas residence might indicate the denial of an OIC. The denial may not end the matter since an appeals process exists.
The offer in compromise option
A taxpayer might owe an amount that he or she may be unable to pay. When income, savings, and assets prove insufficient to pay the tax debt, the IRS could accept an offer in compromise. With an OIC, someone with $15,000 in debt could offer to pay $7,000 to settle the account. If the IRS accepts the offer, the debt ends up settled.
The offer must accompany financial evidence showing the inability to pay or that paying the debt could cause significant hardships. Applications that don’t follow the required steps or fail to establish financial troubles could lead to rejection. Even so, the taxpayer may appeal the denial.
Appealing a denied OIC
A specific form exists for those interested in filing an appeal, but taxpayers have the option to write a letter containing all the pertinent information necessary. Either way, taxpayers must address the denial and point out their disagreement. Compelling evidence that supports the appeal could work in the taxpayer’s favor, so including such documentation may be necessary.
For example, the IRS might underestimate housing or utility expenses. The taxpayer would like need to provide documents that prove the correct amount.
Anyone interested in filing an appeal must do so within 30 days of the denial’s mailing date. Not meeting the due date requirement could leave the taxpayer unable to appeal.