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The timeframe for appeal of a denied offer in compromise

In a previous post, we discussed a denied offer in compromise filed by actor Wesley Snipes. He tried appealing, first to the IRS Office of Appeals and then to the Tax Court, but lost his appeals due to specific fact circumstances unique to his case. In this post, we’ll discuss the time frames for general appeals of denied offers in compromise.

Denied offers in compromise are appealable directly to the IRS Office of Appeals without having to go to the Tax Court. Appeals can take a long time, though, with many appeals taking a year or more to decide. The first question that springs to mind is usually this: why does it take so long?

The GAO data

A recent report from the Government Accounting Office (GAO) helps shed light on the length of the appeals process. The analysis involved examination of nearly 37,000 IRS offer in compromise appeals between 2014 and 2017.

The results show that the average decision on a denied offer in compromise was issued in about 240 days, with 15 percent of decisions coming in 90 days or less, and about 15 percent of them taking over a year. The great majority of appeals of denied offers in compromise took less than two years to resolve. Contrast this with large case examination, where roughly 30 percent of appeals took longer than two years.

The biggest contributing factor to the delay

A main reason for delay illustrated by the GAO report is a lack of qualified staff at the appellate level. The number of people handling appeals at the IRS dropped significantly between 2010 and 2017, falling from a high of 2,172 down to only 1,345 currently. These staffing shortfalls will likely get worse before they get better: almost one-third of the appeals staff is now eligible for retirement, which will mean that there are even fewer workers skilled enough to handle the difficult technical issues associated with the appellate process. 

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