IRS offers in compromise drop 57% as taxpayer applications rise

Nina Olson: Nina Olson serves as executive director of the Center for Taxpayer Rights after a long tenure as National Taxpayer Advocate at the IRS from 2001 to 2019. She provides independent oversight and advocacy on taxpayer rights issues, including debt relief options like offers in compromise. Olson has publicly described the current low acceptance rates as unprecedented and detrimental to taxpayers in financial distress. Internal Revenue Service: The Internal Revenue Service is the primary federal agency responsible for administering and enforcing U.S. tax laws, including the collection of revenues and oversight of taxpayer debt resolution programs. It manages the offer in compromise process, which permits eligible taxpayers facing hardship to settle liabilities for less than the full amount owed based on reasonable collection potential. Recent operational pressures from workforce reductions under the Trump administration have coincided with significantly fewer acceptances despite rising submissions. Court Rulings: A recent federal appeals court decision upheld the IRS's discretion to reject offers in compromise on public policy grounds to protect voluntary tax compliance. Taxpayer Process: Eligibility rules for offers in compromise require taxpayers to remain current on filings and estimated payments while the IRS evaluates cases based on individual financial circumstances. Workforce Policy: The Trump administration has continued using deferred resignation programs and other measures to reduce federal agency staffing levels.