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Offer in compromise processing concerns

There are certain frustrating things a taxpayer could encounter in their efforts to resolve a tax debt. Among these are Internal Revenue Service processing problems and delays in relation to a resolution option they are pursuing.

One tax debt resolution option a taxpayer may be able to apply for with the IRS is an offer in compromise. This is an agreement in which a tax debt is resolved in exchange for a payment that is lower than the amount of the debt. As with many requests to the IRS, the process of seeking an offer in compromise has various formal requirements and can get complex.

How is the IRS doing when it comes to the processing of taxpayer requests for offers in compromise? Well, a recent Treasury Inspector General for Tax Administration report indicates that, while there have been improvements in the IRS’s processes regarding offers in compromise, processing problems still exist when it comes to the handling of offer-in-compromise requests.

Among the processing concerns that the report raised in relation to such requests were concerns that IRS workers:

  • Might not be discussing alternatives with taxpayers when they should.
  • Are sometimes not completing the initial processing of requests as quickly as they are supposed to.
  • Are sometimes not contacting taxpayers in relation to an offer-in-compromise request as soon as they are supposed to.

In connection to these concerns, the report made certain recommendations to the IRS. This includes a suggestion to send out a reminder to IRS workers of some of the deadlines related to the handling of offer-in-compromise requests. The IRS reportedly is in agreement with the recommendations. One wonders if the efforts the IRS takes in response to the suggestions will lead to fewer processing problems.

When a person encounters processing difficulties and delays when it comes to a request they made to the IRS over a tax debt, they may be very worried about what impacts the problems will have on their case and what they can do to in response to such problems. The potential for such problems to arise is among the reasons why skilled legal guidance can be important to have when trying to resolve a tax debt.

Source: Accounting Today, “More Improvement Needed in IRS Offer in Compromise Process,” Michael Cohn, Nov. 1, 2016

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