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IRS Overwhelmed by Offers-In-Compromise Requests

Submitted by admin on Thu, 4/26/2012 - 12:00 am

The IRS is having trouble dealing with the growing backlog of Offer in Compromise (OIC) submissions from struggling taxpayers. The IRS has recently been promoting the program during the tough economic times in order to assist taxpayers who qualify for a reduction in their tax liabilities.

According to TIGTA, the Treasury Inspector General, Offer in Compromise submissions as increased 28% over the past 4 years, and at the same time, the internal resources within the IRS which process and evaluate the offers has decreased, creating an inventory backlog. TIGTA’s review of a sample of OIC submissions by taxpayers, found that the IRS did not process all of the offers on a timely basis.

In 74% of the sample, the IRS failed to contact the taxpayer or their representative within the timeframe promised. In addition to this, as of October 2011, there were 7,472 offer’s unassigned and waiting in holding queues, and 37% of those were more than 6 months old.

TIGTA is recommending that the IRS revise its OIC processing procedures, train employees and add performance measures for the streamlined OIC process. IRS officials agree with the TIGTA recommendations, and vow to take corrective action, but we’ve heard this before. Hopefully, they will take action quickly.

The possible silver lining in this cloud is that the IRS has only 2 years to process an Offer in Compromise, therefore if they sit on it too long it can lead to an automatic acceptance.