Many Taxpayers Do Not Qualify for an Offer in Compromise OIC
Absent special circumstances, if you have the ability to fully pay your tax
liability in a lump sum or via an installment agreement, an offer in
compromise will not be accepted.
Offer in Compromise Payments are Non-refundable
The IRS considers the 20 percent payment for a lump sum offer and any
periodic payments as “payments on tax” and are not refundable,
regardless of whether the offer is declared not-processable or is later
returned, withdrawn, rejected or terminated by the IRS.
Federal Tax Liens are Not Released
If there is a Notice of Federal Tax Lien on record prior to acceptance of
the offer, the lien is not released until the OIC terms are satisfied or until
the liability is paid, whichever comes first. A Notice of Federal Tax Lien
may be filed during the course of the Offer in Compromise investigation.
Payments May be Designated
You may designate in writing how the IRS should apply payments made
with the filing of the offer and while an offer is under investigation. Without
a written designation, payments will be applied to the tax liability and in
the government’s best interest.
The IRS will keep any refund, including interest due, because of an
overpayment of any tax or other liability, for tax periods extending through
the calendar year the IRS accepts the OIC. Exception: Offers submitted
under the basis of doubt as to liability.
The IRS will keep all payments and credits made, received or applied to
the total original tax liability before the OIC was submitted. The IRS may
also keep any proceeds from a levy that was served prior to the
submission of an OIC, but which were not received at the time the OIC
Statutory Period for Collection Suspended
The statutory period for collection is suspended during the period that the
OIC is under consideration (pending) and is further suspended if the OIC
is rejected by the IRS and you appeal the rejection.
Five Year Compliance
If your offer is accepted, you must timely file all tax returns and timely pay
all tax for five years or until the offered amount is paid in full, whichever
period is longer. Failure to adhere to these terms will result in default of
the offer and the IRS may then collect the amounts originally owed plus
penalties and interest.
If your OIC is rejected, you will have the opportunity to file an appeal
which will be heard by the IRS Office of Appeals. There are no appeal
rights associated with offers that are returned, withdrawn or
Approved Installment Agreement
If you have an approved installment agreement and submit a periodic
payment offer, you are not required to continue to make the installment
agreement payments while the offer is being investigated. You will,
however, be required to make the OIC periodic payments as they become
Email for more information or call: 800-227-7474 (24hr)