The IRS can reject an OIC for public policy reasons. In their Policy Statement since 1960, they can just reject for this reason:
IRM 220.127.116.11.15 (Approved 07-26-1960)Policy Statement 5-89
Offer may be rejected for public policy reasons :
If the acceptance of an offer might in any way be detrimental to the Government’s interests, it may be rejected even though it is shown conclusively that the amounts offered are greater than could reasonably be collected in any other manner.
Some of these reasons may be:
1. Liability is from an audit where fraud was present
2. Liability is from tax on an illegal activity
3. There is a criminal investigation ongoing
4. There is involvement in an abusive tax avoidance transaction (”ATAT”)
5. The taxpayer is a tax protestor
There are some other reasons the IRS may summarily reject an OIC. Before an OIC is submitted, it is important that you consider all of the options available. Consultation of a tax professional is imperative as an error may mean you have exposed your financial situation and extended the collection statute of limitations.