OIC Rejection? How to Appeal Your IRS Offer in Compromise

Introduction

You gathered every financial document, carefully calculated your offer amount, paid the $205 application fee, and waited months for a decision — only to receive a letter from the IRS rejecting your Offer in Compromise. It’s frustrating, demoralizing, and scary. But here’s what you need to know: a rejection is not the end of the road.

If your OIC was rejected, you have the right to appeal the decision within 30 days. And appeals can work — the IRS Independent Office of Appeals regularly overturns initial OIC rejections when taxpayers present their case effectively.

Understanding why your offer was denied, how the appeal process works, and what you can do differently is critical. Whether the IRS questioned your asset valuations, disagreed with your expense calculations, or flagged a compliance issue, there are concrete steps you can take to fight back.

In this guide, you’ll learn:

• The most common reasons OICs get rejected (and how to address each one)
• The 30-day appeal window and what happens if you miss it
• How to file Form 13711 (Request for Appeal of Offer in Compromise)
• What to expect during the Independent Office of Appeals process
• When it makes more sense to submit a new OIC instead of appealing
• How to avoid making the same mistakes on resubmission

The IRS rejects approximately 62% of all Offers in Compromise submitted — but many of those rejections are fixable. Let’s walk through exactly how to appeal your OIC denial.

Top Reasons the IRS Rejects Offers in Compromise

Before you can mount an effective appeal, you need to understand exactly why your OIC was rejected. The IRS rejection letter will include a reason code, but here’s a breakdown of the most common causes:

1. Offer Amount Below Reasonable Collection Potential (RCP)

This is the #1 reason for rejection. If the IRS calculates your RCP higher than the amount you offered, they’ll deny it. This often happens because:

• The IRS valued your assets differently than you did
• They disallowed certain expenses you claimed
• They calculated your disposable income higher than your estimate

How to address: Review the IRS’s RCP calculation in your rejection letter and compare it to yours line by line. Identify specific discrepancies and gather documentation to support your numbers. See our guide on how to calculate your Offer in Compromise amount for the correct methodology.

2. Non-Compliance With Filing Requirements

Under the Form 656-B booklet rules, you must be current on all tax return filings before the IRS will consider your OIC. If you have unfiled returns, the IRS will reject (or return) your offer without full consideration.

How to address: File all missing returns immediately and include proof of filing with your appeal.

3. Failure to Make Required Estimated Tax Payments

If you’re required to make estimated tax payments (typically self-employed individuals), you must stay current during the OIC review period. Falling behind signals to the IRS that you’re accumulating new balance while trying to settle old balance.

How to address: Bring all estimated payments current and provide proof of payment with your appeal.

4. Incomplete Application or Missing Documentation

Missing pages of Form 433-A (OIC), unsigned forms, missing bank statements, or inadequate income verification can all trigger a return or rejection.

How to address: Review the Form 656 application checklist and ensure every required document is included.

5. Open Bankruptcy Proceedings

Under 11 U.S.C. § 362, an active bankruptcy case prevents the IRS from processing an OIC. Your offer will be returned if you have an open bankruptcy.

How to address: Wait until bankruptcy proceedings are closed before resubmitting.

Rejection Reason	Fixable on Appeal?	Best Strategy
Offer below RCP	Yes — with supporting documentation	Provide new asset valuations, updated expenses
Unfiled tax returns	Not usually — must fix first	File returns, then resubmit new OIC
Missing estimated payments	Partially	Make payments current, then appeal or resubmit
Incomplete application	Better to resubmit	Submit fresh, complete application
Open bankruptcy	No — must wait	Close bankruptcy, then file new OIC
Doubt as to collectibility not established	Yes — with better documentation	Strengthen financial hardship evidence

The 30-Day Appeal Window: Don’t Miss This Deadline

When the IRS rejects your OIC, you receive a letter (typically Letter 686-C or similar) that includes:

• The specific reason(s) for rejection
• Your right to appeal within 30 daysfrom the date of the letter
• Instructions for filing an appeal

This 30-day window is critical under IRS Revenue Procedure 2003-71 and the Taxpayer Bill of Rights. If you miss it:

• Your rejection becomes final
• The IRS resumes full collection activity, including wage garnishmentsand bank levies
• Your only option is to submit an entirely new OIC (with a new $205 fee and new initial payment)
• The Collection Statute Expiration Date (CSED) tolling that was paused during your OIC review starts running again

What Happens During the Appeal Period

While your appeal is pending:

• The IRS generally cannot levy your wages or bank accounts (IRC § 6331(k))
• Federal tax liens already in place remain active
• You must continue making any required estimated tax payments
• The CSED remains tolled

Pro tip: Mark your calendar the day you receive the rejection letter. Count 30 days from the date on the letter (not the date you received it). If you need more time, contact the IRS immediately to request an extension — though extensions are not guaranteed.

How to File Form 13711: Request for Appeal

Form 13711, “Request for Appeal of Offer in Compromise,” is the formal document you submit to initiate your appeal. Here’s how to complete it effectively:

Section-by-Section Guide

Part I: Taxpayer Information – Your name, SSN/EIN, address, and phone number – Authorized representative information (if applicable, with Form 2848 Power of Attorney)

Part II: Offer Information – Your offer number (found on your rejection letter) – The date of rejection – The amount you originally offered

Part III: Reason for Disagreement This is the most important section. You must clearly and specifically explain why you disagree with the rejection. Be factual, not emotional. Address each reason the IRS cited:

• If the IRS calculated a higher RCP, explain why your calculation is correct with supporting evidence
• If expenses were disallowed, cite the IRS Collection Financial Standards and explain why your claimed amounts are reasonable
• If asset values are disputed, provide independent appraisals or comparable sales data

Attachments to Include: – Copy of the rejection letter – Updated Form 433-A (OIC) if your financial situation has changed – Supporting documentation for disputed items (appraisals, pay stubs, medical records, bank statements) – A written statement or brief explaining your position in detail – Any new evidence not included in the original application

Where to Send Form 13711

Mail your completed Form 13711 and all supporting documents to the IRS office that processed your original OIC. The address is on your rejection letter. Keep copies of everything you send.

The Independent Office of Appeals Process

Once your Form 13711 is received, your case is transferred to the IRS Independent Office of Appeals — a separate division from the collection office that rejected your offer. This is significant because Appeals Officers have:

• Independent authorityto evaluate your case with fresh eyes
• Settlement authorityto negotiate and accept offers
• A mandate to resolve disputesfairly, considering the hazards of litigation

What to Expect During Your Appeal

• 1. Case assignment (2–4 weeks):Your appeal is assigned to an Appeals Officer
• 2. Initial contact (4–8 weeks):The Appeals Officer contacts you (or your representative) by phone or letter to schedule a conference
• 3. Conference:This can be conducted by phone, video, or in person. You present your case, explain the discrepancies, and provide additional evidence
• 4. Review period (varies):The Appeals Officer reviews all evidence and makes a determination
• 5. Decision:The Appeals Officer either:
  • Accepts your original offer
  • Proposes a counter-offer with a different amount
  • Sustains the rejection (upholds the original denial)

The entire appeals process typically takes 3–6 months from the date you file Form 13711.

Tips for a Successful Appeal Conference

• Be prepared and organized. Have all documents indexed and readily accessible
• Be respectful and professional. Appeals Officers respond to clear, fact-based arguments
• Lead with your strongest evidence. If the IRS overvalued an asset, present your independent appraisal first
• Explain special circumstances. Medical issues, job loss, family hardship — if these factors affect your ability to pay, document them thoroughly
• Know your numbers. Be ready to walk through your RCP calculation line by line
• Consider bringing representation. A tax attorney or enrolled agent experienced in OIC appeals can significantly improve your outcome

When to Submit a New OIC vs. Appeal

Not every rejection is best handled through an appeal. In some cases, submitting a completely new Offer in Compromise is the smarter strategy:

Scenario	Best Option	Why
IRS disagreed with asset values	Appeal	You can present new appraisals/evidence
Expenses were disallowed	Appeal	You can argue for higher allowable amounts
Unfiled returns caused rejection	New OIC	Must fix compliance first; appeal won’t help
Financial situation changed significantly	New OIC	New application reflects current reality
Application was incomplete	New OIC	Faster than appealing an incomplete case
Offer was close to IRS RCP	Appeal	Small gap is easier to bridge in Appeals
Offer was far below IRS RCP	New OIC with higher amount	Appeal unlikely to overcome large gap

Advantages of Appealing

• No new $205 application fee
• No new initial payment required
• Continues the collection hold (levy protection)
• CSED remains tolled
• Fresh set of eyes reviews your case

Advantages of a New OIC

• Start with a clean application
• Reflect updated financial circumstances
• Fix all errors from the original submission
• Potentially qualify for a lower offer if your situation worsened

Common Mistakes to Avoid When Appealing

Many taxpayers sabotage their own appeals by making preventable errors:

• 1. Missing the 30-day deadline.This is the most catastrophic mistake — there’s no second chance
• 2. Submitting the same information.If the IRS rejected your numbers, you need new evidence — not the same forms again
• 3. Getting emotional in your written statement.Stick to facts, figures, and documentation
• 4. Failing to address the specific rejection reason.Your appeal must respond directly to what the IRS cited
• 5. Not staying in compliance.If you fall behind on current tax obligations during the appeal, it can be dismissed
• 6. Ignoring counter-offers.If the Appeals Officer proposes a reasonable alternative amount, seriously consider accepting it rather than risking a sustained rejection

For more on avoiding common OIC mistakes, see our detailed guide.

Frequently Asked Questions

Can I appeal an OIC rejection more than once?

You generally get one appeal through the Independent Office of Appeals per OIC submission. If the Appeals Officer sustains the rejection, your options are to submit a brand-new Offer in Compromise (with a new $205 fee and initial payment) or explore alternative resolution options like an installment agreement or currently not collectible status. In rare cases, you may be able to petition the Tax Court under IRC § 7122(e) if you believe the IRS abused its discretion, though this is an expensive and time-consuming route.

What happens to my initial payment if my OIC is rejected?

If your OIC is rejected, the IRS applies your initial payment (20% lump sum or periodic payments made during review) to your outstanding tax liability. This money is not refunded. However, if you meet the Low-Income Certification guidelines on Form 656, you don’t have to send the application fee, the initial payment or monthly payments while the IRS considers your offer. This is an important financial consideration — the money reduces your balance but doesn’t go back in your pocket.

Do I need a tax professional to file an appeal?

While you can file Form 13711 and represent yourself at an Appeals conference, working with an experienced tax professional — such as a tax attorney, CPA, or enrolled agent — significantly improves your chances. Appeals Officers are trained IRS employees, and having a representative who understands IRS procedures, Collection Financial Standards, and negotiation strategies levels the playing field. At Global Gate Tax Relief, our OIC specialists handle appeals regularly and know what Appeals Officers are looking for.

Can the IRS collect from me while my appeal is pending?

Generally no. Under IRC § 6331(k), the IRS is prohibited from levying your property while an OIC is pending, for 30 days after rejection, and while an appeal is pending. However, the IRS can still file a Notice of Federal Tax Lien (NFTL) to secure their interest in your assets. If you receive any collection notices like CP504 or LT11 during your appeal, contact the IRS immediately to inform them of your pending appeal status.

How long does an OIC appeal take?

Most OIC appeals through the Independent Office of Appeals take between 3 and 6 months from the date you submit Form 13711. However, complex cases or periods of high IRS workload can extend this timeline. During the entire appeal period, you’re protected from levies but must remain compliant with all current tax obligations. Your Appeals Officer will give you a timeline estimate during your initial conference call.

What if my financial situation changed after my original OIC was rejected?

If your financial situation has materially changed — for example, you lost your job, incurred major medical expenses, or your income decreased — this can actually help your appeal. Provide updated documentation to the Appeals Officer showing your current financial reality. If the changes are significant enough, the Appeals Officer may recalculate your RCP based on current information rather than the data in your original application. Alternatively, you might consider withdrawing your appeal and submitting a fresh OIC that fully reflects your new circumstances.

Don’t Let a Rejection Stop You From Getting Tax Relief

An OIC rejection is disappointing, but it doesn’t mean you’re stuck paying the full amount. Whether you appeal the decision or submit a stronger new application, there are paths forward. The key is acting quickly within the 30-day window and addressing the specific reasons for rejection with solid evidence.

The Offer in Compromise program exists to help taxpayers who genuinely can’t pay their full tax liability. If that’s your situation, don’t give up after one setback.

Need help? Call Global Gate Tax Relief at 1-877-800-8180 for a free consultation. Our team of tax professionals has helped thousands of Americans resolve their IRS problems.