Why the IRS Rejected Your Offer in Compromise – And What to Do Next
If the IRS just rejected your Offer in Compromise, don’t panic — and don’t give up. We work with clients every month who’ve been denied, and many still qualify with the right strategy, financial corrections, or appeal. In this guide, I’ll explain why OICs get rejected, what your next move should be, and how to rebuild your case if you’re still eligible.
An IRS Offer in Compromise (OIC) can be a powerful way to settle your tax debt for less than you owe. But what happens when the IRS says no?
If your OIC was recently denied, you're not alone—and you’re not out of options. In this post, we break down the most common reasons Offers in Compromise get rejected, how to appeal or refile, and how to protect yourself from aggressive collections in the meantime.
Top Reasons the IRS Rejects Offers in Compromise
1. You Can Afford to Pay
The IRS often evaluates how the IRS determines your ability to pay through income, assets, and allowable expenses. If your offer doesn’t reflect your financial reality, it’s likely to be denied.
2. Incomplete or Inaccurate Financials
Missing income sources, understated assets, or vague documentation on your Form 433-A (OIC) can undermine your offer's credibility.
3. Excessive Expenses
The IRS uses Collection Financial Standards to limit what they consider "necessary" living costs. Expenses above these thresholds often get disallowed.
4. Non-Compliance
You must meet filing and payment requirements to show tax compliance as the key to debt resolution. If you’re missing returns or estimated payments, your OIC is automatically denied.
5. Offer Too Low
The IRS calculates a minimum offer based on your Reasonable Collection Potential (RCP). If you offered less than this number, it’s likely to be denied.
6. Public Policy or Trust Fund Issues
If your debt involves Trust Fund Recovery Penalties or recent criminal tax violations, your OIC may be rejected outright.
Many of our clients come to us after an OIC denial — and we still win. Schedule a free consultation to find out what’s still possible.
What to Do After a Rejection
Appeal Within 30 Days
Use Form 13711 to request an appeal. This gives you a chance to correct the record or present new facts.
File a New Offer
If circumstances have changed, our team can guide you on how to qualify for an Offer in Compromise with a stronger, more accurate submission
Explore Other Options
If an OIC isn’t viable, other solutions exist, such as Installment Agreements, or using Currently Not Collectible status to pause collections while your finances stabilize.
Beware: IRS Collections Resume After Rejection
Once the OIC process ends, the IRS may resume enforcement actions:
Missing an appeal deadline can result in immediate IRS collections—so act fast.
Get Expert Help from a Local CPA
At Boulanger CPA and Consulting PC, we’ve helped Orange County taxpayers recover from OIC rejections by strengthening appeals, submitting new offers, or guiding them toward practical alternatives. If you’ve been searching for IRS tax relief near you, our firm provides the local insight and expertise you need.
Every rejection is a chance to rebuild your case with better evidence and compliance. If you want to go deeper into strategies that protect your income and assets, learn more in Defend What’s Yours to understand your full range of rights and remedies.
Call us today at (657) 218-5700 or book online at www.orangecounty.cpa
Frequently Asked Questions
Why would the IRS reject an Offer in Compromise?
Common reasons include miscalculated ability to pay, missing documentation, failure to stay compliant with filings, or an offer amount that’s too low.
Can I appeal a rejected OIC?
Yes. You have 30 days to appeal using IRS Form 13711. Appeals are often successful if you provide stronger documentation or address the issues raised in the rejection.
Should I submit a new offer if mine was denied?
In many cases, yes. If your financial situation has changed, or if your original offer didn’t fully reflect your ability to pay, submitting a new offer may succeed.
What if the IRS rejected my OIC because of non-compliance?
If you missed filings or payments, you must first get compliant before reapplying. Compliance is a strict requirement for OIC approval.
Does rejection mean I’m out of options?
No. Alternatives include installment agreements, partial-pay installment agreements, Currently Not Collectible status, or bankruptcy depending on your situation.
How long does an OIC appeal take?
Appeals often take several months, depending on IRS workload. During this time, enforced collection is typically suspended.
Can California state OICs also be rejected?
Yes. The California Franchise Tax Board has its own OIC program with different criteria. Rejection doesn’t eliminate the option to reapply with stronger documentation.
Should I get professional help after an OIC rejection?
Yes. Professional assistance increases your chances of a successful appeal or resubmission by ensuring compliance, accurate financials, and strategic presentation.
📣 About the Author
Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.
With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.
Marc is a Certified Public Accountant licensed in California and Oklahoma, and is recognized for delivering results—not call center promises. Every case is handled with discretion, strategy, and high-level representation.
📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.
Marc The CPA's Tax Blog
