You spent months gathering bank statements, pay stubs and asset records. Then the Internal Revenue Service (IRS) sent back a rejection of your offer in compromise. That decision stings, but it is not the final word on what you owe. You still have appeal rights, strict deadlines and several alternatives to consider.
Understand why the IRS rejected your offer
The rejection package usually explains the financial numbers behind the IRS decision. It breaks down the agency’s view of your income and expenses as well as the value and equity of your assets. Compare those calculations with the figures you submitted to identify where the IRS reached a different result.
In most cases, the agency concluded it could collect more than you offered based on your reasonable collection potential, which combines the equity in your assets with your expected future income. One caution: a returned offer is not the same as a rejected one. Offers returned for missing returns, unpaid estimated taxes or an open bankruptcy generally do not provide the same appeal rights.
Act within the 30-day appeal window
If the notice says rejected, the clock starts right away. Count 30 days beginning with the date shown on the rejection notice, rather than the day you receive it. Send your request to the office that issued the rejection.
You may submit IRS Form 13711 or prepare a written protest that provides the same information. Explain the items you dispute, the facts supporting your position and any legal authority you rely on. Timing matters for a second reason, since the law generally bars the IRS from levying while a timely appeal is pending.
Build evidence for the points you dispute
Meeting the deadline only opens the door. Appeals work from documents, not frustration, and the IRS warns that a general statement that you cannot pay will not move the review. Compare your Form 433-A (OIC) or Form 433-B (OIC) with the worksheets you received, then identify every line where the figures differ.
The IRS measures living costs against published collection standards, and the Washington housing and utility allowances vary by county, so it does not hold a King County household to a rural figure. For vehicles and real estate, the IRS generally calculates quick sale value by reducing fair market value by 20%, then subtracting what you still owe.
Consider other ways to resolve the tax debt
An appeal is not your only route. A monthly installment agreement spreads the balance over time, and a partial payment plan may fit when full repayment is out of reach before the collection period ends.
If paying anything would leave you short on basic living expenses, currently not collectible status can pause collection, though the debt and interest remain. Penalty relief may shrink the balance itself. Submitting another offer may also become reasonable after a meaningful change in your income, assets or necessary expenses.
Choose the next path for unresolved tax debt
A rejection tells you what the IRS believes it can collect. It does not tell you that number is right. Review the letter promptly, calculate the 30-day deadline and decide whether the disputed figures justify an appeal or another payment strategy makes more sense. Either choice beats letting the deadline pass and leaving the IRS to decide for you.