An offer in compromise is an effective way to put your IRS tax troubles behind you and start afresh. Unfortunately, the IRS can reject your offer, and when they do, they’ll send you a letter with calculations detailing why your offer was rejected.
If that happens, be sure to look at the calculations and ask yourself: Did they have good reason to reject your offer? Can you appeal it?
The IRS may elect to junk an offer in compromise if, after they take a look at your finances, they have reason to believe that you can pay them in full with your future income. That being said, the IRS is not immune to human error and does not necessarily make the correct calculations all the time. In response to the second question: Yes, you have the right to dispute your IRS rejection.
The IRS rejection letter is final only if you allow it to be. You have the ability to set things straight. In general, you will have 30 days to appeal or dispute the calculations. If you don’t know what to do next, consider obtaining the help of an IRS tax lawyer who can help you navigate the intricacies of offer in compromise appeals.