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The IRS Offer In Compromise Program is Really Understaffed? What Does That Mean for You?

FLAT FEE TAX RELIEF

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If you have an IRS tax debt that has been lingering for years, the COVID-19 "pandemic" may be your "blessing in disguise." Due to the lockdowns, the business closures, loss of income, etc., our tax professionals anticipate the IRS will be overwhelmed with debt issues that they need to close. The IRS has the Offer in Compromise (OIC) program that could be "your ticket to paradise." Although the IRS is juggling more problems than normal, securing an accepted settlement offer can still be a struggle.


The tax pros at Flat Fee Tax Relief have been securing approved Offer in Compromise submissions at a rate of 96%, the national average has historically been 42%. Now with the COVID-19 hysteria winding down, the aftermath will be with us for years to come.


You need to know this: the IRS has two priorities. One is to collect money. The other, which may be even more important, is to close a file. An approved Offer in Compromise accomplishes both. Even a $100 tax collection counts as a "collected debt."

The IRS Is Chronically Understaffed

Much of the struggle surrounding the OIC program can be blamed on the chronic understaffing of (and minimal budget for) the IRS in general. This issue has become dire during the pandemic, but it was already alarming long before COVID took over. The Biden Administration has proposed adding $80 Billion to the IRS budget because the government knows that the IRS will be overwhelmed very soon. Now this will help with IRS staffing, but that will not result in immediate tax collection. New staff needs to be trained. That takes time. We believe flooding the "system" with valid, eligible Offer in Compromise submissions will result in increased acceptance.

The IRS processes millions more tax returns than it did just a few years ago, and yet, its staff has seen huge reductions since 2010 due to major budget cuts. Fewer employees are available to handle all areas of tax policy, including audits, installments, and, of course, Offer in Compromise (OIC) applications.

How Staffing Issues Impact OIC Applications

With a smaller IRS workforce comes a reduced ability to process applications for programs such as the OIC. What’s more, IRS employees are less likely to receive the extensive training they need to properly handle settlement offers. This increases the potential for delays and mistakes, thereby also making a lengthy appeals process possible.

The Need for an Experienced Tax Resolution Specialist

According to statistics, the number one reason why an Offer in Compromise is rejected, is due to "Do It Yourself" (DIY) problem. We say "DIY" is a problem because many people think it's easy to do and the IRS actually encourages taxpayers to do their own.

When a novice does their own tax returns or their own settlement offer, the error rate goes through the roof. The IRS screens every Offer in Compromise submission for errors. Any error of any type is cause for rejection. The IRS finds an error, the settlement offer gets rejected and sent back to the taxpayer without an explanation. It’s more important than ever that you handle this process strategically. Even minor errors can lead to a swift rejection, so it’s worth your while to work with an experienced tax resolution specialist.

Do you have a tax debt of $10,000 or more? $10,000 is the minimum to settle. At Flat Fee Tax Relief, our strategic approach will improve your odds even in the midst of extraordinary challenges. Contact us today to learn more.

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