Offer in Compromise acceptance rate

What are the current IRS statistics on the Offer in Compromise acceptance rate?

The Offer in Compromise acceptance rate is 40.32 percent. The IRS Data Book for 2017 (released March 29, 2018) shows that  62,000 Offers were received with 25,000 being accepted. Thus, the Offer in Compromise acceptance rate was  40.32 percent and the Offer in Compromise rejection rate was 59.68 percent. The Average Dollar amount of the Accepted Offers was $10,234.48.

The Offer in Compromise is a collection alternative.  The policy behind the Offer in Compromise program is to afford taxpayers a “fresh start”, while collecting what is potentially collectible at the earliest time, and at the least cost to the government. As such, an Offer in Compromise may be a more attractive alternative than a protracted installment agreement. The Offer may also be a good alternative to having the IRS place an account in currently not collectible status (with interest continuing to enlarge the bill).  Another benefit to the Offer in Compromise is the release of federal tax liens. However, one must remember that the Offer in Compromise is a proposal by a taxpayer to the Federal Government to settle a tax liability for payment of less than the full amount owed. It is a long process, and over the last 4 years, about 59.20 percent of Offer in Compromise proposals are rejected.  Absent special circumstances, an Offer in Compromise will not be accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. There has been a continuing history of the IRS not administering the Offer in Compromise program in a proper manner to achieve the intent of the law.

When you compare the above most recent Offer in Compromise acceptance rate statistics (Fiscal Year 2017) with Fiscal Years 2014 through 2016,  the acceptance and rejection percentages are about the same.  The average Offer in Compromise acceptance rate for such years being 40.80 percent. The average Offer in Compromise rejection rate is 59.20 percent.   However, the Average Dollar Amount of Accepted Offers is steadily increasing each year (i.e., from $6,642.74 to $10,234.48).

The IRS Data Books for 2016 and 2015, show the number of IRS Offers in Compromise received, number of Offers accepted, and the total dollar amount of the Offers accepted as follows:

FY TTL Offers Received Offers Accepted % Accepted % Rejected Average $ Amount of Accepted Offers (Derived)
2016 63,000 27,000 42.86 57.14 $225,946,000 /27,000= $8,368.00 Average
2015 67,000 27,000 40.3 59.7 $204,748,000 / 27,000= $7,583.00 Average
2014 68,000 27,000 39.71 60.29 $179,354,000 / 27,000= $6,642.74 Average

Your specific facts and circumstances and skilled representation determine your specific results.  The Taxpayer Advocate has made recommendations to improve the Offer in Compromise program.

IRC Section 7122(b) requires that in civil cases where the unpaid amount of tax assessed (including any interest and other additions) is $50,000.00 or more, the Treasury Department’s General Counsel review and provide an opinion in support of accepted Offers in Compromise. The Taxpayer Advocate believes that the present Counsel review procedure burdens taxpayers and the government by significantly delaying Offer in Compromise decisions.The Taxpayer Advocate also recommends repealing of the Partial Payment requirements for both “lump sum” and “periodic payment” offer applications. Hopefully, such recommendations will be acted on.