Offer Requirements – What Happens When it’s Accepted?
It’s a great accomplishment to have your offer accepted by the IRS. Even if you are paying the vast majority of the liability, you are saving continued interest and penalties! There are strings attached to your offer, just like they are to a payment plan. Some offer requirements to remember are as follow…
You Must File and Pay on Time
You need to make sure all your taxes are paid and filed on time. “Not a day late or a dollar short” I say. This goes for companies that you have controlling interests in as well as individual taxes. The time period is presently five years. The IRS must also log in your monthly payment (if making one as part of the offer), by the due date each month. Failure to do this, will default your offer. The original balance plus accrued interest and penalties, less your payments, will be reinstated.
You Will Lose Your Refunds
If you later have any adjustments to the years that were compromised, you will lose the refund.
You Will Quickly be Sent Back to IRS Collections
Upon default, you will be sent back to the collection division of the IRS. They may take enforcement action without contacting the taxpayer again. So if the offer rejection letter gets to you too late, you may have to undo a bank levy. The best thing to do is to contact the IRS when you know you will be in default, not after. Then you can arrange an alternative way to file or pay your taxes so that the the offer will not be defaulted. So far I don’t know anyone who had a reasonable request turned turn in this circumstance.
Offer Filing, Statute Extension
The filing of an offer will extend the time of the statute of limitations on collection. Knowing your rights, and what rights are taken away are important when considering any IRS offer in compromise.
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