Getting behind on paying your taxes can cause considerable problems for your business. Working with your attorney, you consider your options and decide to take advantage of the offer in compromise program offered by the IRC. It is a massive benefit for you as it takes off much of the accumulated tax debt. However, it is quite a shock when you find out the IRS rejected your request.
What are the common reasons for an OIC rejection?
An OIC or offer in compromise is an IRS program that offers taxpayers a lower tax debt amount. Many things can affect your request, and the IRS may reject an offer in compromise application for several reasons. They include:
- Ability to pay more: The IRS will investigate your finances and check whether you are under-declaring your income.
- Incomplete forms and documents: The IRS will return your application if it needs more requirements or information.
- Failing to make required payments: A failure to make the required monthly payments can forfeit the OIC awarded to you.
- Under bankruptcy proceedings: The IRS will not process your application when you have an active bankruptcy proceeding.
- Failure to file your tax returns: You must be updated on your tax returns to be eligible for an OIC.
- Insufficient withholding tax payments: You need to make sufficient estimated tax payments or have enough income tax withholding for the year you submit your application.
The IRS can have other reasons to reject your OIC application. If you choose to, you can appeal the decision within 30 days. To make the appeal more successful, consult a professional with tax experience. Having legal guidance can help you understand why you were rejected and improve your chances of reapplying.
