According to the Treasury Inspector General for Tax Administration (TIGTA) report, the IRS was overwhelmed by Offer in Compromise (OIC) requests. Due to the backlog of OIC requests, TIGTA recommended changes to the OIC program. The IRS did implement some of the recommended changes.
The following are some of the highlights in the TIGTA report.
o TIGTA reviewed 99 offers. IRS failed to timely contact the taxpayer 74% of the time.
o There are 7,472 unassigned offers in holding queues.
o The Holtsville, NY OIC processing site had 4 times the number of unassigned offers compared to the Memphis, TN OIC processing site. This statistic does not surprise me. Prior to 2012, offers for individuals that owned a business were filed at the Holtsville, NY processing site and offers for individuals that earn wages were filed at the Memphis, TN processing site. In my past experience, it was more difficult to get an OIC accepted at the Holtsville, NY processing site. It almost seemed that agents at the Holtsville, NY site would automatically reject the OIC. If there was a large backlog at the Holtsville, NY site then there is a possibility the IRS agents were motivated to reduce backlog by not giving some OICs full consideration in order to reduce backlog.
o 37% of the offers were more than six months old.
The TIGTA made some recommendations to improve OIC processing time. The following are some of the recommendations implemented by the IRS.
o The streamline OIC was expanded to include taxpayers with annual income less than $100,000 and a tax balance less than $50,000 as part of the “Fresh Start” program.
o The OIC forms and related instruction booklet was made easier to complete.
o OICs are now assigned to the Holtsville, NY processing site and Memphis, TN processing site based on the taxpayer’s state of residence. After this change was implemented, about 300 unassigned offers from the Holtsville, NY processing site were transferred to the Memphis, TN processing site.
When I file an OIC for a client, I inform them that it could take up to 6 months before the IRS assigns their case to a specialist. I hope the new changes implemented by the IRS speed up the OIC process. So far the results are promising. According to the TIGTA report, streamline OICs have been processed 28 days faster than non-streamline OICs.
If need help filing an OIC for relief, call ALG Tax Solutions for assistance. 855-MI-TaxHelp, (855-648-2943)
IRS Circular 230 Disclosure: To the extent this writing contains advice on a federal tax issue, the advice is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.