Letter 86C: Refusal to Process Offer in Compromise

The Letter 86C is sent by the IRS to notify taxpayers that their offer in compromise (OIC) has been refused and will not be processed. The letter provides the reasons for the refusal and outlines the taxpayer’s options moving forward.

Key aspects of Letter 86C:

• Reasons for Refusal: The letter will explain why the offer in compromise was refused, which could be due to incomplete documentation, ineligibility, or the taxpayer’s ability to pay more than what was offered.
• Next Steps: The letter provides instructions on how to address the issues that led to the refusal. Taxpayers may need to submit additional documentation, correct errors in the OIC application, or revise the terms of their offer.
• Resubmitting the OIC: If the taxpayer believes they can meet the IRS’s requirements, they may resubmit the offer with updated financial information or revised terms. The letter includes guidelines for resubmitting the OIC.
• Appeal Options: Taxpayers have the right to appeal the refusal if they believe the decision was made in error. The letter provides instructions for filing an appeal and the deadline for doing so.

Letter 86C is an important communication for taxpayers seeking to resolve their tax debt through an offer in compromise, as it explains why the offer was refused and how to move forward with the process.