The Hidden Pitfall: "Tolling" the Collection Time
Here's a vital pitfall to remember: applying for an OIC and getting denied can extend the time the IRS has to collect your tax debt.
This happens through a process called "tolling" the collection time.
While your OIC application is under review, the IRS cannot collect from you—they won't garnish your wages, levy your bank account, or take other collection actions.
However, that clock essentially stops ticking during this period.
So, if you spend a year "waiting and hoping" for the IRS to accept your offer and they deny it, that entire year gets added back to the original ten-year window.
This means the IRS now has more time to pursue collections against you—time that you might have otherwise been chipping away at.
It is critical that you have the right team advising you regarding your specific situation and your collection statutes.