The Offer Process

Each offer is unique. As a result, there is no way to predict the outcome. I have had offers rejected that should have been accepted on the initial filing. Similarly, I have had offers accepted that I never thought would be accepted. However, this does not mean an offer should not be attempted — and even attempted more than once. The reason it should be tried is that it avoids having a bankruptcy on your record.

The offer begins with the taxpayer completing Form 433a-OIC and Form 656. Form 433a must be completed by the taxpayer first, because it is a list of your assets. Please do not despair. If it takes you more than two hours to complete this form, you have taken too much time and ignored my instructions. I will review the form and, based on what it states, we file the Form 433a and, after consultation with you, file Form 656, which sets the offer amount. This amount can be a lump sum and/or monthly payments that do not last more than two years. Additionally, those monthly payments do not have to be equal — you can have small monthly payments, with a large balloon at the end.

The offer is filed with the IRS, and once they receive it, they must cease all collection efforts. This is a tremendous advantage, because the entire offer process usually takes at least one year to complete. Therefore, if your tax arrearage is already two years old from the due date of the return, filing an offer prevents the IRS from taking enforcement action until the three-year period has expired.

Once the offer is filed, it is assigned to an agent. Unfortunately, there are good agents and bad agents, and who you are assigned to is by the luck of the draw. No one can guarantee what will happen with the review, but if a settlement cannot be reached, you have the option to take it to the next level: the IRS Appellate Division.

I have used the applicable collection regulations discussing hardship offers, along with the IRS Offer regulations, on many of these files — they should not be ignored. Using these regulations, I settled one arrearage in excess of $100,000 for $100 a month for 24 months, and another arrearage of a similar size for a lump sum payment of $11,000.

IRS Appeals

Approximately one-half of my cases are appealed internally within the IRS. The advantage is that IRS appellate conferees are not reviewed based on the revenue they generate, but on the number of cases they settle. As a result, most appellate conferees are easy to work with, and we generally reach a settlement. In fact, I once had an appellate conferee reject an offer because he could not get his supervisor to approve it. He told me to refile the offer, which I did, and it was accepted within two weeks.

Can I guarantee that an offer will be accepted? Unfortunately, I cannot. But if the offer is rejected, you still have the right to file bankruptcy.