Every ranking “mistakes” list is anecdote. This one is organised by consequence and tied to the rule each mistake breaks — because the IRS processes offers in two filters: mistakes that get an offer returned (never evaluated, no appeal, fee kept) and mistakes that get it rejected (evaluated and refused, appealable). Run this catalogue as a pre-submission audit against the checklist.
General tax information, not tax or legal advice. Federal IRS programme only.
1. Filing with unfiled returns. The single most common self-inflicted wound. Rule: all required returns filed before processing (Form 656-B’s eligibility screen). Fix is free — file first. 2. Applying during an open bankruptcy. Offers cannot be processed while a bankruptcy case is open. Wait for discharge/dismissal. 3. Missing the fee or the initial payment — or combining them. The $205 fee and the initial payment are separate instruments; a single combined check can stall processability. (Or claim the waiver properly — fee page.) 4. Incomplete or unsigned forms. A missing signature, blank section, or absent 433 form returns the packet. The examiner does not complete your homework. 5. Letting compliance lapse during review. A new unfiled return or missed periodic payment mid-review converts a pending offer into a return/withdrawal — months of waiting, gone (in-review duties are on the timeline).
6. Offering below your reasonable collection potential. The arithmetic refusal (IRM 8.23.3 evaluation standard): if assets + future income exceed your offer, the examiner proposes the RCP figure instead. Prevention: compute honestly first (calculator · worksheet). 7. “Forgetting” assets the file reveals. Home equity, retirement accounts (valued at net-withdrawable), a paid-off vehicle, an expected inheritance or lawsuit recovery. Examiners cross-check transcripts, statements, and public records; an omission reads as bad faith, not a typo — Seattle Tax Attorney’s mistakes guidance puts asset/expense omissions at the top for this reason. 8. Claiming your real expenses instead of the IRS’s standards. Private-school tuition, credit-card minimums, and above-standard housing do not raise your allowance; they only make your 433 look unreliable next to your bank statements. 9. Spending visibly while claiming hardship. Bank statements showing discretionary spending during the tax debt’s life can trigger the dissipated-assets doctrine — the examiner adds spent assets back into your RCP. 10. Ignoring the examiner’s document requests. Each request carries a deadline; silence closes files unfavourably. If a document genuinely does not exist, say so in writing before the deadline. 11. Treating acceptance as the finish line. Post-acceptance lapses — one late return inside the 5-year compliance window — can default the whole compromise and reinstate the full debt (after-acceptance rules). This “mistake” happens after most guides stop writing.
What are the most common mistakes people make when they apply for an offer in compromise? Seattle Tax Attorney’s OIC FAQ (the question is verbatim theirs) leads with expense and asset omissions; the IRS-side data adds the return-makers above — unfiled returns, fee/payment defects, and in-review lapses. The catalogue on this page merges both views and labels each mistake by its consequence.
My offer was rejected, what options do I have? Appeal within 30 days (Form 13711) — full route on the appeal page (IRS OIC FAQs).
My offer was returned, what can I do now? Cure the process defect and submit a new offer — returns carry no appeal rights (IRS OIC FAQs). Identify which return-maker above caused it before paying a second fee.
General tax information, not tax or legal advice. Sources: Form 656-B processability rules; IRM 8.23.3 (evaluation of offers); IRS OIC FAQs; Seattle Tax Attorney, Cross Law Group, J. David Tax Law mistake guides (framing/questions). Reviewed 2026-10-22.