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Congress Makes Changes to the Offer in Compromise Program Effective July 15, 2006
On July 15, 2006, the Internal Revenue Service (IRS) will change its requirements for the filing of Offers in Compromise (Offer). Taxpayers that file an Offer will now be required to enclose a partial payment of their Offer amount at the time of filing their Offer.
For a “cash” Offer (i.e. Offer amount paid in less than five (5) installments) the IRS now requires a taxpayer to enclose twenty percent (20%) of the proposed Offer amount at the time of filing the Offer. For example, a taxpayer filing a “cash” Offer of $100.00 would be required to submit an initial payment of $20.00 at the time of filing.
For a “short-term deferred” or “deferred” Offer (i.e. Offer amount paid in greater than five (5) installments), the IRS now requires a taxpayer to enclose the first proposed installment payment at the time of filing the Offer. A taxpayer proposing a “short-term deferred” or “deferred” Offer must continue the proposed installment payments while the Offer is in consideration. For example, a taxpayer filing a “short-term deferred” Offer of $4,800.00 would be required to submit an initial payment of $200.00 at the time of filing. In addition, the taxpayer would be required to continue the $200.00 per month payment until the Offer was accepted, rejected, or returned.
This payment is in addition to the previous $150.00 Offer submittal fee. Failure to enclose the submittal fee or this additional payment at the time of filing the Offer will result in the Offer being returned without appeal rights. For a “short-term deferred” or “deferred” Offer, the failure to continue the proposed installment payments while the Offer is in consideration will be viewed by the IRS as a withdrawal of the Offer. Furthermore, payments made at the time of submitting an Offer or during consideration of an Offer will not be returned were the Offer rejected, returned, or withdrawn.
The final change is the amount of time the IRS has to review a filed Offer. For all Offers received after July 15, 2006, the IRS will have two (2) years to review and investigate the Offer. If a final determination has not been reached on the Offer within two years, the Offer is deemed accepted. The two years start to run on the date in which the IRS has determined that the Offer has met all procedural requirements. Final determination includes accepting, rejecting, or returning the Offer.
Related Links
- Offer in Compromise
- Services: Offer in Compromise
- Offer in Compromise - Non-liable Parties
- Offer in Compromise - Retired Debt
Source: RoniDeutch.com
