In general it takes many months to have an offer in compromise reviewed by the IRS. This is mainly due to the fact that there are approximately 75,000 or more offers filed each year and only a handful of offer examiners. Now keep in mind that the offer examiners don’t handle every offer in compromise that comes in because some are handled by appeals officers or revenue agents depending on the timing of the filed offer in compromise or the type of offer in compromise that has been filed.
Usually, it takes the taxpayer several weeks to gather together all of the required financial information for the offer in compromise. After I have had an opportunity to review that information and make a determination on the amount I feel would be accepted as an offer in compromise, I meet with my client and discuss with them all of the resolution options. If the client chooses to submit the offer in compromise, we prepare the form 656 and send it to the IRS.
This is where patience comes in handy. Approximately one month after the IRS receives the offer package that we submit we will receive a letter that indicates the offer in compromise is processable. (More on what a processable offer in compromise is another day). The letter also informs us that the offer in compromise package is being sent to the revenue officer/offer specialist responsible for that offer.
Generally, it will be another month or so before we receive any communication from the revenue officer regarding the offer. At that time they usually request more information, or just an update of the financial information and attachments since it has taken several months to make its way to the revenue officer.
After this, there is usually lots of communication between my office and the revenue officer discussing the attachments and the determinations being made by the revenue officer. And finally, after several months we will receive a determination from the revenue officer – acceptance or rejection. If the offer has been rejected then we usually have some grounds to appeal on and we will do so. This extends the process even longer.
The short answer to the question is that it may take up to a year or more for your offer in compromise to be examined by the IRS and any decision made. It may take even longer than that to appeal any decision made to IRS appeals. Worst case, if you are still not satisfied you can appeal on up to the tax court which. Any time “court” is involved you know you’re looking at a lengthy process.
[...] offer in compromise process is generally a very lengthy one. I described the offer in compromise process in a previous [...]