My request for an Offer in Compromise was denied. Should I simply “bite the bullet” and pay off all of my tax debt, plus penalties and interest?

The way you phrased this question provides an important clue about your likely answer. The fact is an Offer in Compromise should be made only when you simply can't pay your tax debt in full—plus penalties and interest—without having to liquidate all your assets and declare bankruptcy. To an alert IRS revenue officer, your willingness to “bite the bullet” may indicate that you had the wherewithal to pay your full tax debt in the first place, and you filed an Offer in Compromise simply as a stalling tactic!

Let's interpret your question more innocently, though. It may be you are a genuine candidate for an Offer in Compromise, but you made the mistake of dealing with the IRS yourself, or you hired a lawyer who lacked the proper experience in tax law. Your request may have been denied simply because you didn't supply the proper documentation—bank records, mortgage payments, credit-card bills, etc.—either of out ignorance or laziness. The IRS certainly will not take your word for it that you can't pay your tax debt; the examiner needs proof; and the more, the better.

In this case, you needn't “bite the bullet” and resign yourself to financial catastrophe. What you should do is hire an experienced tax attorney who can help you file a Request for Appeal of Offer in Compromise, which you are entitled to do within 30 days of your initial rejection. If you supply the necessary documentation, you may well find that the government takes you up on your offer, saving you a significant amount of money.

Questions? Call the Oklahoma tax experts at Travis W. Watkins, PC (800-721-7054) to find out more today!