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2014 Offer in Compromise Stats: Denials Up, Offer Amount Up

The Internal Revenue Service (IRS) recently put out data that shows the total amount of Offers In Compromise received and accepted by the IRS for 2014 fell in comparison to 2013.

An Offer In Compromise (OIC), is a program under 26 U.S.C. § 7122, that allows qualified businesses or individuals with unpaid tax liabilities to settle for an amount less than is owed. The Offer In compromise program is heavily advertised by many tax companies. However, only a small percentage of those that file an OIC actually get it accepted. This is largely due to the fact that the process generally requires the help of a  tax professional.

OIC Acceptance Rates Falls 2.2% to 39.7% for 2014

Even though the Offer in Compromise acceptance rate fell to 39.7% in 2014 from 41.9%, the acceptance rate is still relatively high when compared to previous years.

irs offer in compromise acceptance rate 2005-2014
Many believe the acceptance rate is better because more low-income taxpayers are filing for them. Others, point to the fact that the IRS made it easier to qualify with the advent of the IRS’s Fresh Start Initiative that lead to more flexible offer in compromise terms. Sean Chi, lead tax attorney at Clean Slate Tax states, “There are a number of reasons why OIC success rates have increased. One, is that tax professionals have become more adapt at identifying and filing OIC’s with the highest rates of success. Another explanation is that people are still struggling financially even if the recession is ‘over.’ Many people still do not have equity in their homes and their income has not grown as fast as the cost of living.”

OICs Received Fell; Dollar Amount Average Per Offer Slightly Up

The amount of OICs filed also dropped by about 8.8% to roughly 68,000 from roughly 74,000 in 2013. Interestingly, the average offer amount per OICs accepted jumped 5.39% to $6,643 compared with $6,303 in 2013.

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