Offer in Compromise Questions

Offer Determinations

 

406  Is a tax lien released when an OIC is accepted?

The IRS releases a Notice of Federal Tax Lien when all of the OIC payment terms are satisfied. For an immediate release of a lien, a taxpayer can submit payment using a certified check and include a request letter.

407  What happens if I do not meet all the terms of my accepted OIC?

The IRS may default the OIC and reinstate the entire tax liability, less all payments and credits received.

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408  What happens if I default my OIC?     (REVISED 8/2004)

The IRS may take the following actions:

• Immediately file suit to collect the entire unpaid balance of the offer
• Immediately file suit to collect an amount equal to the original amount of the tax liability as liquidating damages, minus any payment already received under the terms of this offer
• Disregard the amount of the offer and apply all amounts already paid under the offer against the original amount of the tax liability
• File suit or levy to collect the original amount of the tax liability, without further notice of any kind 

NOTE: The IRS will not default an agreement when taxpayers have filed a joint OIC with your spouse or ex-spouse, as long as you have kept, or are keeping, all the terms of the agreement, even if your spouse or ex-spouse violates the future compliance provision.

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409  What happens if I do not file my tax return or pay my taxes next year?

The OIC will be defaulted. An OIC requires future compliance for a period of five (5) years from the date of acceptance of the OIC, or until the offered amount is paid in full, whichever is longer. Compliance is the timely filing and paying of all required returns and taxes.

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