Offer in compromise taking too long? How to get an IRS decision quick and not wait
You want to submit an offer in compromise to the IRS, but you need an answer and relief now, fast. Your circumstances are immediate, but it takes the IRS a minimum of 6-9 months to process, investigate and get managerial approval of an offer in compromise.
That may not be acceptable. Maybe you are selling real estate, and have a closing pending hat will fund the settlement. Or have a new job offer that requires settlement of your IRS debt. Maybe your business has a big transaction pending that requires full resolution of IRS debts.
But the IRS can convinced to speed up its investigation of an offer in compromise. Buried in the IRS internal guidelines is Internal Revenue Manual 5.8.4.27, which provides for the expedited handling of an offer in compromise.
When submitting the offer in compromise, it is important to make sure the IRS knows that you have an emergency requiring a quick compromise investigation. To do this, on the top your Form 656, Offer in Compromise, write in bold, all cap letters: EMERGENCY PROCESSING REQUESTED.
I also suggest demonstrating to the IRS the reasons why the normal compromise process times would be detrimental to both you and the government. In other words, it needs be made clear to the IRS that moving slow will hurt their chances of getting paid from the compromise, and moving fast will help bring in money.
To convince the IRS to shorten the usual compromise investigation time, a statement should accompany the offer in compromise detailing the basis for the emergency processing request. Make it easy on the IRS, and give them a reason to say yes to your request – be specific with the facts, and attach any documentation that backs up the statement. (I have drafted a pretty good number of supporting statements of fact for the IRS – if you need help with this, let me know.) Citation should also be made to the Internal Revenue Manual provision that permits faster investigation of a compromise.
Here are some examples as to what the IRS considers a basis for a quick offer in compromise investigation:
1. A contract or business agreement requires you to resolve your tax debt by a specific date.
2. The money that you are offering to pay the IRS in settlement is available for a limited time.
3. Illness may affect your ability to complete payment terms.
There is one constant in these examples: If the IRS takes too long to investigate the compromise, there will be no compromise, and everybody loses. A key to getting the IRS to move quick is demonstrating how your time constraints will impact payment to the IRS.
These examples are not exclusive, but they do demonstrate that, to the IRS, emergency processing of an offer in compromise is all about time and money. If the IRS (1) takes too much time, (2) they will not get money.
If you have already submitted the compromise but did not make the expedited request, we would need to track down the compromise in the IRS centralized compromise processing system and submit the request. The IRS Taxpayer Advocate can also be used to help find the compromise and get it on a fast track. If an IRS investigator is already working your case, the request for expedited processing can still be made direct to the investigator.
Sure, the IRS can be frustrating in the time it takes to investigate an offer in compromise. But if the proper IRS guidelines are followed, the time can be shortened, the IRS gets paid, and you get a fresh start from your tax debt.
