How Offer in Compromise Appeals Work After a Denial

Overview

When the IRS denies an Offer in Compromise (OIC), taxpayers have a formal right to appeal the decision. The appeal shifts review from the collection or campus office that handled the OIC to the IRS Independent Office of Appeals, which reviews the facts, interpretation of law, and whether collection actions are fair and reasonable (see IRS Appeals office guidance: https://www.irs.gov/appeals).

In my 15+ years helping clients with OICs and post-denial disputes, I’ve found appeals are won when taxpayers (1) act quickly, (2) provide targeted, credible documentation, and (3) frame the case around the IRS evaluation criteria—especially Reasonable Collection Potential (RCP) and the three grounds for an OIC: doubt as to collectibility, doubt as to liability, and effective tax administration (see IRS Offer in Compromise pages: https://www.irs.gov/individuals/offer-in-compromise).

This article walks through the timeline, required steps, documentation checklist, realistic outcomes, and next moves after an appeal—plus practical strategies to maximize your chance of success.

Why appeals matter

An appeal is not simply a rehash of your original offer. Appeals staff are independent from the local collection unit and trained to weigh facts differently, including whether the administrative collection results in economic hardship or is inequitable (IRS Office of Appeals). Properly prepared appeals can change decisions, reduce balances, or at least buy time while you pursue other relief options.

Typical timeline and deadlines

• Read the denial letter immediately: it explains the reason(s) and the exact deadline and instructions for appeal. Most denial notices give a 30-day window to request an appeal, but you must follow the timeline shown on the letter (confirm on your denial notice and IRS site: https://www.irs.gov/appeals).
• Submit a timely appeal request (often Form 13711 or the specific request method in the denial letter). If you miss the appeal window, options narrow and you may need to reapply or explore alternatives.
• Appeals review and response commonly take several months. Complexity, need for additional documents, and Appeals’ workload affect timing.

Note: timing in weeks or months varies case-by-case; Appeals aims to provide a fair and independent review, not a rapid one.

How to start an appeal (step-by-step)

1. Read the denial letter closely. It will tell you exactly how to submit your appeal and the deadline. Follow those instructions verbatim.
2. Request Appeals review. The denial notice will instruct whether to use Form 13711 (Request for Appeals Review) or submit a written request. If the notice references a specific form or address, use that method. You can find general Appeals guidance here: https://www.irs.gov/appeals and the Form 13711 info at https://www.irs.gov/forms-pubs/about-form-13711.
3. Prepare a focused appeal package. See the checklist below. Appeals reviewers respond better to a clean, organized package that ties documents directly to the denial reasons.
4. Decide the format: written-only appeal or request for a conference (telephonic, virtual, or in-person). Requests for conferences are common and give you an opportunity to present your case directly.

What Appeals will evaluate

Appeals reviews the original denial reasons and any new information you submit. Key areas they examine:

• Reasonable Collection Potential (RCP): the IRS’s calculation of how much you could pay now or in the future from assets and future income. If you can show the RCP was miscalculated (incorrect asset values, omitted expenses, medical hardship), Appeals may adjust it.
• Eligibility basis: whether your case fits one of the OIC grounds (doubt as to collectibility, doubt as to liability, effective tax administration) and whether supporting evidence meets IRS guidance.
• Documentation quality and credibility: bank statements, bills, valuations, medical records, and corroborating third-party evidence carry weight.

(For RCP and OIC criteria, see IRS instructions and Form 656 guidance: https://www.irs.gov/individuals/offer-in-compromise and Form 656 instructions.)

Documentation checklist for a strong appeal

Provide only relevant, current documentation that addresses the denial reasons. Organization matters: include a short cover letter that maps each document to the denial points.

• The IRS denial letter (copy)
• A concise appeal cover letter summarizing your arguments and the relief you seek
• Completed financial forms previously submitted (Form 433-A, Form 433-B, or Form 433-F) with updated figures as needed
• Bank statements (3–12 months depending on issue)
• Pay stubs, profit-and-loss statements, or Social Security/benefits award letters
• Proof of monthly living expenses (rent/mortgage statements, utility bills, childcare/medical bills)
• Proof of extraordinary/unreimbursed medical expenses, recent or ongoing (doctor statements, billing)
• Appraisals or sale listings for assets the IRS valued
• Documentation of legally enforceable obligations (child support, recent bankruptcy schedules, court judgments)
• Any third-party statements (landlord, employer) that corroborate facts

Attach a one-page executive summary that points appeals officers to exactly where each denial reason is rebutted.

Common reasons denials are overturned

• The IRS overstated asset values or ignored realistic costs to sell or convert assets.
• The taxpayer documented recurring, non-discretionary expenses the campus unit missed (medical costs, high commuting costs, unreimbursed business losses).
• Evidence proves a legal mistake in assessment or the tax liability itself (doubt as to liability).

In my practice, the most persuasive appeals show a revised RCP calculation side-by-side with new supporting documentation.

What to expect at an Appeals conference

• Format: phone, virtual, or in-person. You can request representation (a CPA, enrolled agent, or attorney) to speak for you.
• Tone: Appeals tries to be conciliatory and looks for practical resolutions.
• Offer adjustments: Appeals may propose a revised OIC, suggest an installment agreement, or recommend other collection alternatives.
• If Appeals upholds the denial, the letter will explain options, including whether there are further administrative or court remedies available.

See tips for preparing an appeals conference in more detail: Winning Your Appeals Conference: Preparing Evidence and Presentation Tips.

Realistic outcomes after an appeal

• Full acceptance of the original OIC or acceptance of a modified offer
• Partial acceptance: settlement on a lesser amount than originally denied but possibly different payment terms
• Denial upheld: you receive a written decision and instructions on next steps
• Alternative resolution: Appeals may recommend an installment agreement, currently not collectible (CNC) status, or other remedies

If Appeals denies relief, review the decision for any remaining administrative remedies. In some limited cases you may have a right to go to U.S. Tax Court, but that path is specific and depends on the notice you received.

Alternatives to appealing

If an appeal is unlikely to succeed or you miss deadlines, consider alternatives such as:

• Submitting a new OIC with corrected or updated information (see how to build your financial package: https://finhelp.io/glossary/how-to-build-a-financial-package-for-an-offer-in-compromise/)
• Negotiating a partial-payment installment agreement or other installment options (see: https://finhelp.io/glossary/irs-installment-agreements-how-to-get-a-reduced-monthly-payment/)
• Requesting Currently Not Collectible status if you can prove no ability to pay
• Exploring bankruptcy or other legal remedies (consult counsel)

Refer to our guide on alternatives: When an Offer in Compromise Is Not the Right Choice.

Common mistakes to avoid

• Waiting to act until the 11th hour; Appeals packages that arrive late often leave taxpayers with fewer options.
• Providing a mass of undirected documents. Always include an index and a one-page summary.
• Not updating financial statements; Appeals looks for current ability-to-pay figures.
• Failing to dispute clear errors in the RCP calculation (incorrect asset values, ignored expenses).

Practical tips that improve outcomes

• Lead with a one-page executive summary that cites the exact denial paragraph and shows the corrected figure or legal point.
• Use neutral third-party evidence (appraisals, medical records, employer letters) whenever possible.
• If your case relies on hardship or unpredictable future events, show a clear timeline and corroboration.
• Consider professional representation for complex cases—Appeals places weight on credible, well-documented presentations.

Final checklist before you file the appeal

• Confirm the appeal deadline on the denial letter and use the specified method (Form 13711 or written request).
• Prepare a clear cover letter and executive summary mapping documents to denial reasons.
• Include updated financial statements and corroborating evidence.
• Request a conference if you want to present orally, and confirm who will speak for you (you or a representative).

Sources and further reading

• IRS, Offer in Compromise (OIC) overview and guidance: https://www.irs.gov/individuals/offer-in-compromise (accessed 2025).
• IRS, Independent Office of Appeals: https://www.irs.gov/appeals (accessed 2025).
• IRS, About Form 13711, Request for Appeals Review: https://www.irs.gov/forms-pubs/about-form-13711 (accessed 2025).

Professional disclaimer: This article provides general information and examples based on my experience and public IRS guidance. It is not legal or tax advice for your specific situation. For case-specific recommendations, consult a qualified tax professional or attorney who can review your documents and represent you before the IRS.