The short answer: Under IRC Section 7122(f), if the IRS doesn't reject, accept, or return your Offer in Compromise within 24 months of receiving it, the offer is automatically deemed accepted by law — the settlement amount you proposed becomes binding without the IRS ever formally saying yes. With the IRS having lost over 26,000 employees in 2025 and OIC cases sitting untouched for months at a time, this rule has real teeth in 2026 for the first time in its history.
By Romeo Razi, CPA & Yoav Betsion, EA — Former IRS Tax Examiner & IRS Practitioner · Published June 30, 2026
Most taxpayers who submit an Offer in Compromise are just hoping the IRS says yes. What they don't realize is that Congress built a backup into the law: if the IRS doesn't get around to deciding, you win by default.
The relevant statute is IRC Section 7122(f), added by the Tax Increase Prevention and Reconciliation Act of 2005:
"Any offer-in-compromise submitted under this section shall be deemed to be accepted by the Secretary if such offer is not rejected by the Secretary before the date which is 24 months after the date of the submission of such offer."
The IRS has 24 months from the date it receives your complete OIC. If that window closes without a formal rejection, return, or acceptance — your offer is accepted. Full stop. The IRS cannot come back later and say it was rejected.
For most of its history since 2005, this provision was theoretical. The IRS processed offers within 6–12 months. Nobody hit the wall. That changed.
The IRS lost more than 26,000 employees in 2025 — a workforce reduction of roughly 26% in a single year. This wasn't targeted. It was blunt. Entire units lost experienced staff. The OIC unit specifically saw cases being transferred between offices multiple times — sometimes Houston to Louisiana and back — without resolution.
Yoav Betsion, an Enrolled Agent with 20 years of IRS practice, documented a real case: a client's OIC was transferred between four separate OIC units without ever receiving a decision. Two years in. When that clock runs out, the math is simple.
"If you file an offer in compromise and the IRS doesn't reply to you within two years — it's deemed accepted. Think about what that means right now. They fired everyone. Cases are sitting. If your case doesn't get touched for two years... that's your settlement, by law."
The clock starts when the IRS receives your complete and processable OIC — meaning all required forms (Form 656, Form 433-A or 433-B), the application fee ($205), and the required initial payment are included and correct. If the IRS returns your offer because it's incomplete, the clock doesn't start until you resubmit a complete package.
The 24-month clock starts. You will receive a letter confirming receipt. Keep this letter — the date on it is your clock start.
The IRS checks that all forms are present and complete. If something is missing, they return the offer and the clock does not start. This is different from a rejection — a returned offer can be resubmitted.
Normally. With current staffing, this phase is experiencing significant delays. Cases may sit unassigned for months. Transfers between offices reset the practical timeline without resetting the legal clock.
If the IRS has not formally rejected, accepted, or returned the offer by this date, it is legally deemed accepted under IRC Section 7122(f). The appeal period does not count toward the 24 months.
The statute specifically excludes "any period during which any tax liability which is the subject of such offer-in-compromise is in dispute in any judicial proceeding." This means time spent in the appeals process after a rejection does not count toward the 24 months. The clock only runs while the offer is sitting in the IRS's OIC unit without a decision.
Before the 2025 staff reductions, the IRS processed most OICs in 6–12 months. The IRS Data Book reported it accepted about 12,711 of 30,163 offers in 2023 — a 42% acceptance rate for fully processed offers. The average wait was uncomfortable but workable.
After the staff cuts, documented cases show offers sitting for 6+ months before a single IRS employee contacts the taxpayer. Cases are being transferred between OIC units in different states when local capacity is overwhelmed. The IRS has publicly acknowledged processing delays and case backlogs across virtually every function.
The math of the 24-month rule now applies differently:
| Time Period | Pre-2025 Typical | 2026 Reality |
|---|---|---|
| Initial review (processability) | 2–4 weeks | 2–8 weeks |
| Assignment to an OIC examiner | 2–3 months | 4–9 months |
| Financial investigation | 3–6 months | 6–18 months |
| Decision issued | 6–12 months total | 12–24+ months |
| Risk of hitting 24-month wall | Very low | Meaningfully higher |
This is not a loophole. It is a taxpayer protection written into the law. Congress didn't want the IRS to be able to sit on offers indefinitely while collection continued. The 24-month rule forces the agency to act.
In normal times, this meant nothing practically. In 2026, with a depleted OIC unit handling a backlog of cases, it means:
"We had a client owe 2.1 million to the IRS. We offered 75,000. Between the time you submit and until they make a decision is about a year and a half. He made more money during that time and they came back with a counteroffer of 205,000. We settled. But the point is — that entire time, no collection activity. No garnishment. Nothing. And if they had simply not replied for two years? Legally accepted at $75,000."
A deemed acceptance has exactly the same legal effect as a formal acceptance letter. You owe the amount you offered — not the original balance.
But the obligations are identical to a formal acceptance:
This is where people lose everything they gained. If you get your OIC accepted — formally or by deemed acceptance — and then miss a single filing deadline or leave a balance unpaid in the next 5 years, the IRS can default your agreement and reinstate the original full tax liability, minus payments made. The OIC does not end the obligation to stay current on future taxes.
This is the interaction that can turn a smart strategy into a mistake. The IRS has a 10-year Collection Statute Expiration Date (CSED) — 10 years from the date of assessment, they can no longer collect.
Filing an OIC tolls (pauses) the CSED. The time your OIC is pending, plus 30 days after rejection, gets added back onto the end of the 10-year clock.
If your 10-year collection statute is expiring in 18 months, filing an OIC extends the IRS's collection window. Yoav Betsion has a direct example: a client owed $60,000 with a CSED expiring in March 2026. His advice: "Don't touch it. Don't do anything. Because what happened is, we waited — and on the day of the 10 years, it just dropped automatically." The right move was to do nothing and let the clock run. Filing an OIC would have restarted it.
Check your CSED before you do anything. Your tax transcript will show the assessment date for each year you owe. Add 10 years. If you're within 2–3 years of that date and you don't have a strong reason to believe the IRS will collect aggressively, the statute strategy may be better than an OIC.
See our full guide on the IRS 10-year collection statute for how this plays out in practice.
The 24-month clock only starts when the IRS receives a complete and processable offer. If your submission is missing anything, they return it without starting the clock. Here's what a complete submission requires:
Get certified mail proof of delivery. Write down the date you mailed it. Follow up within 3–4 weeks to confirm the IRS received and accepted it for processing — you can check status at irs.gov or call the OIC phone line. That receipt date is your clock start.
The interaction between the 24-month deemed-acceptance rule, the 10-year collection statute, and the 5-year compliance requirement is genuinely complex. Get it right the first time.
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