Prediction: IRS Delays Could Lead to Automatic Tax Debt Settlements

Jim Payne, CPA • July 17, 2025

Here’s one of my predictions for the next few years—thanks to recent IRS layoffs and ongoing staffing shortages, more Offers in Compromise (OICs) are going to slip through the cracks. And when that happens, some taxpayers might see their tax debt automatically settled without the IRS ever reviewing their case.


Sound too good to be true? It’s not. There’s a little-known rule that works in your favor:

The Two-Year Rule: A Potential Loophole for Taxpayers

Under IRC § 7122(f), it's automatically approved if the IRS doesn’t accept, reject, or return your OIC within 24 months. If they miss the deadline, your tax debt is settled, no questions asked.


Here’s why I think this will be happening more often:

  • The IRS recently laid off all probationary employees, meaning fewer people are handling OICs.
  • IRS backlog issues have already caused massive delays in processing tax relief requests.
  • If staffing shortages continue, some OICs will likely remain untouched long enough to qualify for automatic acceptance.


For taxpayers, now is the time to be aggressive with your offers—since the IRS might approve them without any negotiation if they miss the deadline.

How to Take Advantage of This Potential IRS Slowdown

If you owe taxes and think you qualify for an Offer in Compromise, now might be the best time to submit one. Here’s how to maximize your chances of benefiting from this rule:

  1. Submit a complete and accurate OIC – The IRS can return incomplete applications, which resets the two-year clock.
  2. Keep proof of when they receive it – The 24-month countdown starts the day the IRS gets your OIC, so hold onto that confirmation.
  3. Stay patient – If you haven’t heard back, don’t push for an answer too soon. The longer they take, the better.
  4. Don’t withdraw your offer – If you pull it yourself, the two-year rule doesn’t apply.

Final Thoughts

With IRS staffing issues piling up, I predict that more taxpayers than ever will get their OICs automatically approved because the IRS won’t process them in time. If you’re struggling with tax debt, now might be the perfect time to use the system’s delays to your advantage by submitting an Offer.


Call (352) 317-5692 today to learn more.

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