Offer in Compromise
OIC Rejected — Now What? Your Next Steps (2026)
The short answer: if your OIC (Offer in Compromise) was rejected — now what matters most is the 30-day clock. You generally have 30 days from the rejection letter date to appeal using Form 13711. You can also fix and resubmit a returned offer, or switch to a payment plan or hardship status. Do not ignore the letter.
⏱ Your deadline: 30 days from the date printed on your rejection letter to file Form 13711, Request for Appeal of Offer in Compromise. That window is counted from the letter date — not the day it arrived in your mailbox. Miss it and the rejection becomes final, and collection can start back up.
First, figure out: rejected or returned?
These two words look similar but mean very different things, and the IRS uses them deliberately. Read your letter carefully.
A rejected offer was actually reviewed. An IRS examiner looked at your finances and decided your offer amount was too low — usually because their math says you can pay more than you offered. You have the right to appeal a rejection within 30 days.
A returned offer was never fully considered. The IRS sent it back because something was missing — an unfiled tax return, a skipped payment, an estimated-tax shortfall, or a missing form. You can't appeal a returned offer, but the fix is often simple: correct the problem and resubmit. The official rules for both live on the IRS's Offer in Compromise page.
Why your OIC was rejected
An Offer in Compromise is approved only when the amount you offer equals or beats what the IRS calls your "reasonable collection potential" — basically, what they think they could collect from your income and assets over time. When an offer is turned down, it almost always comes down to one of these:
- The offer was too low. The IRS valued your home equity, retirement accounts, vehicles, or future income higher than you did.
- Your income looked too high. Their formula multiplies your monthly leftover income (after allowable expenses) by 12 or 24 months and adds it to your asset value.
- Expenses were disallowed. The IRS uses national and local allowable living expense standards, and anything above those caps usually gets cut from the calculation.
- Missing or stale information. Bank statements, pay stubs, or a Form 433-A that didn't match your actual situation.
The rejection letter will spell out the IRS's number. That figure is your roadmap — it tells you exactly what they think you can pay and where they disagreed with you.
What happens if you do nothing
While your offer was pending, the IRS generally couldn't levy you. A rejection — if you let the 30 days lapse — removes that shield. Here's the sequence that can follow:
- Rejection finalized — the 30-day appeal window closes with no Form 13711 filed.
- Collection resumes — your account goes back into active collection. Penalties and interest, which never stopped, keep adding up.
- Notices restart — you may receive reminder and intent-to-levy notices like the CP504 and the final LT11 / Letter 1058.
- Enforcement — after the final notice and 30 more days, the IRS can garnish wages, levy bank accounts, and file or keep a federal tax lien.
One important point: the time your offer spent under review (plus 30 days) usually pauses the 10-year collection statute. So filing an offer can push your end date back. That's not a reason to avoid offers — it's a reason to make sure the one you file is one that can actually win.
Your options after an OIC rejection
A rejected offer is not a dead end. You have several paths, and the best one depends on your numbers:
- Appeal it (Form 13711). Independent Office of Appeals officers are separate from the examiner who said no. If the rejection relied on bad asset values or disallowed expenses, an appeal is often your strongest move. File within 30 days.
- Fix and resubmit. If the offer was returned, or if your finances have genuinely worsened since you filed, a fresh, better-documented offer may succeed. Submitting the same rejected numbers, though, usually gets the same answer.
- Installment agreement. A monthly payment plan keeps you in good standing and stops enforcement. If you can't cover full payments, a partial-payment installment agreement lets you pay a reduced monthly amount over time.
- Currently Not Collectible. If paying anything would leave you unable to cover basic living costs, Currently Not Collectible status pauses collection. The debt stays, but levies and garnishments stop.
- Compare the routes. Not sure whether to fight or switch? Our guide on a payment plan vs. an Offer in Compromise walks through who fits which.
How to respond, step by step
- Read the letter and note the date. Confirm whether it says "rejected" or "returned," and circle the letter date — your 30 days starts there.
- Pull the IRS's calculation. The letter or attached report shows their reasonable collection potential figure. Compare it line by line against what you submitted.
- Spot the disagreement. Did they overvalue an asset? Disallow an expense you can document? That's the heart of your appeal.
- File Form 13711 to appeal — within 30 days — using the IRS's Independent Office of Appeals. Attach documentation for every point you dispute and keep copies of everything.
- If you won't appeal, set up a payment plan or hardship status before the 30 days end, so collection doesn't restart in a gap.
- If you're feeling squeezed by levy threats, the Taxpayer Advocate Service can help when normal channels stall.
Got a rejection letter in your hand?
Send us a photo of it. An experienced tax professional will read the IRS's own calculation, tell you whether an appeal can win, and lay out every option — free, confidential, no pressure. Beware anyone who promises to "settle for pennies on the dollar" before they've reviewed your finances; that's a sales pitch, not a plan.
OIC rejection questions, answered
What's the difference between a rejected OIC and a returned OIC?
A rejected offer was reviewed and turned down on the merits — you can appeal it within 30 days. A returned offer was never fully considered, usually because of a missing form, an unfiled return, or an unpaid fee. You can't appeal a returned offer, but you can fix the problem and resubmit it.
How long do I have to appeal a rejected Offer in Compromise?
You generally have 30 days from the date on the rejection letter to file Form 13711, Request for Appeal of Offer in Compromise. The 30 days is counted from the letter date, not the day you received it, so don't wait. Miss the window and the rejection stands.
Do I get my OIC application fee and payments back if it's rejected?
No. The application fee is not refunded, and any payments you sent with the offer are applied to your tax balance rather than returned. They aren't lost — they reduce what you owe — but you won't get a check back. This is one reason to confirm you actually qualify before you file.
Can I just submit a new Offer in Compromise after being rejected?
You can, but only if something has changed — lower income, fewer assets, or new financial hardship. Submitting the same numbers that were already rejected usually leads to the same answer. Appealing the existing decision is often faster and stronger than starting over from scratch.
What happens to collection while my OIC is rejected or on appeal?
The IRS generally cannot levy while your offer is pending or while a timely appeal is being considered. But once an offer is fully rejected and the appeal window closes with no action, collection can resume — including levies and garnishments. The pause only lasts while something is actively in front of the IRS.
This guide is general information, not tax or legal advice for your specific situation. Eligibility for IRS programs depends on individual facts and circumstances; no outcome is guaranteed.